Correlation Between Fidelity Advisor and Industrials Portfolio

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

By analyzing existing cross correlation between Fidelity Advisor Sumer and Industrials Portfolio Industrials, you can compare the effects of market volatilities on Fidelity Advisor and Industrials Portfolio 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 Industrials Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Advisor and Industrials Portfolio.

Diversification Opportunities for Fidelity Advisor and Industrials Portfolio

0.81

Correlation Coefficient

Fidelity Advisor  Industrials Portfolio

Very poor diversification

The 3 months correlation between Fidelity and Industrials is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advisor Sumer and Industrials Portfolio Industri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrials Portfolio 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 Sumer are associated (or correlated) with Industrials Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrials Portfolio has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and Industrials Portfolio go up and down completely randomly.

Pair Corralation between Fidelity Advisor and Industrials Portfolio

Assuming the 90 days horizon Fidelity Advisor Sumer is expected to generate 0.98 times more return on investment than Industrials Portfolio. However, Fidelity Advisor Sumer is 1.02 times less risky than Industrials Portfolio. It trades about 0.28 of its potential returns per unit of risk. Industrials Portfolio Industrials is currently generating about 0.14 per unit of risk. If you would invest  4,347  in Fidelity Advisor Sumer on September 14, 2024 and sell it today you would earn a total of  839.00  from holding Fidelity Advisor Sumer or generate 19.3% return on investment over 90 days.

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

Fidelity Advisor Sumer  vs.  Industrials Portfolio Industri

Fidelity Advisor Sumer

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Sumer are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Fidelity Advisor showed solid returns over the last few months and may actually be approaching a breakup point.

Industrials Portfolio

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Industrials Portfolio Industrials are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Industrials Portfolio may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Fidelity Advisor and Industrials Portfolio

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

The idea behind Fidelity Advisor Sumer and Industrials Portfolio Industrials 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 Stocks Directory module to find actively traded stocks across global markets.