Correlation Between Fidelity Advantage and CI Preferred

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Can any of the company-specific risk be diversified away by investing in both Fidelity Advantage and CI Preferred at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Fidelity Advantage and CI Preferred into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Advantage Bitcoin and CI Preferred Share, you can compare the effects of market volatilities on Fidelity Advantage and CI Preferred and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Fidelity Advantage with a short position of CI Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Advantage and CI Preferred.

Diversification Opportunities for Fidelity Advantage and CI Preferred

-0.46
  Correlation Coefficient

Very good diversification

The 3 months correlation between Fidelity and FPR is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advantage Bitcoin and CI Preferred Share in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Preferred Share and Fidelity Advantage is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Fidelity Advantage Bitcoin are associated (or correlated) with CI Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Preferred Share has no effect on the direction of Fidelity Advantage i.e., Fidelity Advantage and CI Preferred go up and down completely randomly.

Pair Corralation between Fidelity Advantage and CI Preferred

Assuming the 90 days trading horizon Fidelity Advantage Bitcoin is expected to generate 9.12 times more return on investment than CI Preferred. However, Fidelity Advantage is 9.12 times more volatile than CI Preferred Share. It trades about 0.34 of its potential returns per unit of risk. CI Preferred Share is currently generating about 0.07 per unit of risk. If you would invest  3,308  in Fidelity Advantage Bitcoin on August 31, 2024 and sell it today you would earn a total of  1,209  from holding Fidelity Advantage Bitcoin or generate 36.55% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Fidelity Advantage Bitcoin  vs.  CI Preferred Share

 Performance 
       Timeline  
Fidelity Advantage 

Risk-Adjusted Performance

20 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advantage Bitcoin are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Fidelity Advantage displayed solid returns over the last few months and may actually be approaching a breakup point.
CI Preferred Share 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days CI Preferred Share has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, CI Preferred is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Fidelity Advantage and CI Preferred Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fidelity Advantage and CI Preferred

The main advantage of trading using opposite Fidelity Advantage and CI Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Advantage position performs unexpectedly, CI Preferred can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in CI Preferred will offset losses from the drop in CI Preferred's long position.
The idea behind Fidelity Advantage Bitcoin and CI Preferred Share pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Correlations module to find global opportunities by holding instruments from different markets.

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