Correlation Between Fidelity Advisor and Retailing Portfolio

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

Diversification Opportunities for Fidelity Advisor and Retailing Portfolio

0.95

Correlation Coefficient

Fidelity Advisor  Retailing Portfolio

Almost no diversification

The 3 months correlation between Fidelity and Retailing is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advisor Sumer and Retailing Portfolio Retailing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retailing 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 Retailing Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retailing Portfolio has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and Retailing Portfolio go up and down completely randomly.

Pair Corralation between Fidelity Advisor and Retailing Portfolio

Assuming the 90 days horizon Fidelity Advisor Sumer is expected to generate 1.29 times more return on investment than Retailing Portfolio. However, Fidelity Advisor is 1.29 times more volatile than Retailing Portfolio Retailing. It trades about 0.23 of its potential returns per unit of risk. Retailing Portfolio Retailing is currently generating about 0.22 per unit of risk. If you would invest  4,186  in Fidelity Advisor Sumer on August 31, 2024 and sell it today you would earn a total of  689.00  from holding Fidelity Advisor Sumer or generate 16.46% return on investment over 90 days.

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

Fidelity Advisor Sumer  vs.  Retailing Portfolio Retailing

Fidelity Advisor Sumer

Risk-Adjusted Performance

18 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Sumer are ranked lower than 18 (%) 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.

Retailing Portfolio

Risk-Adjusted Performance

17 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Retailing Portfolio Retailing are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Retailing Portfolio may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Fidelity Advisor and Retailing Portfolio

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

The idea behind Fidelity Advisor Sumer and Retailing Portfolio Retailing 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.