Correlation Between Industrials Portfolio and Fidelity Advisor

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

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

Diversification Opportunities for Industrials Portfolio and Fidelity Advisor

0.8

Correlation Coefficient

Industrials Portfolio  Fidelity Advisor

Very poor diversification

The 3 months correlation between Industrials and Fidelity is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Industrials Portfolio Industri and Fidelity Advisor Sumer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Sumer and Industrials Portfolio 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 Industrials Portfolio Industrials are associated (or correlated) with Fidelity Advisor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Advisor Sumer has no effect on the direction of Industrials Portfolio i.e., Industrials Portfolio and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Industrials Portfolio and Fidelity Advisor

Assuming the 90 days horizon Industrials Portfolio is expected to generate 1.28 times less return on investment than Fidelity Advisor. But when comparing it to its historical volatility, Industrials Portfolio Industrials is 1.1 times less risky than Fidelity Advisor. It trades about 0.08 of its potential returns per unit of risk. Fidelity Advisor Sumer is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,586  in Fidelity Advisor Sumer on September 20, 2024 and sell it today you would earn a total of  1,738  from holding Fidelity Advisor Sumer or generate 67.21% return on investment over 90 days.

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

Industrials Portfolio Industri  vs.  Fidelity Advisor Sumer

Industrials Portfolio

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Industrials Portfolio Industrials are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Industrials Portfolio is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Advisor Sumer

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Sumer are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Fidelity Advisor may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Industrials Portfolio and Fidelity Advisor

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

The idea behind Industrials Portfolio Industrials and Fidelity Advisor Sumer 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.

Check out your portfolio center.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.