Correlation Between Fidelity Advisor and Ivy Balanced

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

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

Diversification Opportunities for Fidelity Advisor and Ivy Balanced

0.61

Correlation Coefficient

Fidelity Advisor  Ivy Balanced

Poor diversification

The 3 months correlation between FIDELITY and Ivy is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advisor Diversified and Ivy Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivy Balanced 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 Diversified are associated (or correlated) with Ivy Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivy Balanced has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and Ivy Balanced go up and down completely randomly.

Pair Corralation between Fidelity Advisor and Ivy Balanced

Assuming the 90 days horizon Fidelity Advisor Diversified is expected to under-perform the Ivy Balanced. In addition to that, Fidelity Advisor is 3.48 times more volatile than Ivy Balanced Fund. It trades about -0.14 of its total potential returns per unit of risk. Ivy Balanced Fund is currently generating about -0.05 per unit of volatility. If you would invest  2,408  in Ivy Balanced Fund on October 7, 2024 and sell it today you would lose (26.00) from holding Ivy Balanced Fund or give up 1.08% of portfolio value over 90 days.

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

Fidelity Advisor Diversified  vs.  Ivy Balanced Fund

Fidelity Advisor Div

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Advisor Diversified has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Fidelity Advisor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ivy Balanced

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ivy Balanced Fund are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ivy Balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fidelity Advisor and Ivy Balanced

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

The idea behind Fidelity Advisor Diversified and Ivy Balanced Fund 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.