Correlation Between Fidelity Advisor and Bright Rock

Can any of the company-specific risk be diversified away by investing in both Fidelity Advisor and Bright Rock 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 Advisor and Bright Rock into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fidelity Advisor Industrials and Bright Rock Mid, you can compare the effects of market volatilities on Fidelity Advisor and Bright Rock 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 Advisor with a short position of Bright Rock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Advisor and Bright Rock.

Diversification Opportunities for Fidelity Advisor and Bright Rock

0.55

Correlation Coefficient

Fidelity Advisor  Bright Rock

Very weak diversification

The 3 months correlation between Fidelity and Bright is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advisor Industrials and Bright Rock Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bright Rock Mid and Fidelity Advisor 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 Advisor Industrials are associated (or correlated) with Bright Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bright Rock Mid has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and Bright Rock go up and down completely randomly.

Pair Corralation between Fidelity Advisor and Bright Rock

Assuming the 90 days horizon Fidelity Advisor Industrials is expected to generate 1.22 times more return on investment than Bright Rock. However, Fidelity Advisor is 1.22 times more volatile than Bright Rock Mid. It trades about -0.14 of its potential returns per unit of risk. Bright Rock Mid is currently generating about -0.2 per unit of risk. If you would invest  4,154  in Fidelity Advisor Industrials on December 2, 2024 and sell it today you would lose (450.00) from holding Fidelity Advisor Industrials or give up 10.83% of portfolio value over 90 days.

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

Fidelity Advisor Industrials  vs.  Bright Rock Mid

Fidelity Advisor Ind

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity Advisor Industrials has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Bright Rock Mid

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bright Rock Mid has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Fidelity Advisor and Bright Rock

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

The idea behind Fidelity Advisor Industrials and Bright Rock Mid 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.