Correlation Between Fidelity Advantage and NBI Liquid

Can any of the company-specific risk be diversified away by investing in both Fidelity Advantage and NBI Liquid 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 NBI Liquid 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 NBI Liquid Alternatives, you can compare the effects of market volatilities on Fidelity Advantage and NBI Liquid 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 NBI Liquid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Advantage and NBI Liquid.

Diversification Opportunities for Fidelity Advantage and NBI Liquid

-0.33

Correlation Coefficient

Fidelity Advantage  NBI Liquid

Very good diversification

The 3 months correlation between Fidelity and NBI is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advantage Bitcoin and NBI Liquid Alternatives in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBI Liquid Alternatives 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 NBI Liquid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBI Liquid Alternatives has no effect on the direction of Fidelity Advantage i.e., Fidelity Advantage and NBI Liquid go up and down completely randomly.

Pair Corralation between Fidelity Advantage and NBI Liquid

Assuming the 90 days trading horizon Fidelity Advantage Bitcoin is expected to under-perform the NBI Liquid. In addition to that, Fidelity Advantage is 5.18 times more volatile than NBI Liquid Alternatives. It trades about -0.04 of its total potential returns per unit of risk. NBI Liquid Alternatives is currently generating about 0.09 per unit of volatility. If you would invest  2,202  in NBI Liquid Alternatives on December 23, 2024 and sell it today you would earn a total of  73.00  from holding NBI Liquid Alternatives or generate 3.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Fidelity Advantage Bitcoin  vs.  NBI Liquid Alternatives

Fidelity Advantage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity Advantage Bitcoin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

NBI Liquid Alternatives

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NBI Liquid Alternatives are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, NBI Liquid is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Fidelity Advantage and NBI Liquid

The main advantage of trading using opposite Fidelity Advantage and NBI Liquid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Advantage position performs unexpectedly, NBI Liquid 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 NBI Liquid will offset losses from the drop in NBI Liquid's long position.

The idea behind Fidelity Advantage Bitcoin and NBI Liquid Alternatives 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.