Correlation Between Fidelity Advisor and Wireless Portfolio

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

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

Diversification Opportunities for Fidelity Advisor and Wireless Portfolio

0.3

Correlation Coefficient

Fidelity Advisor  Wireless Portfolio

Weak diversification

The 3 months correlation between Fidelity and Wireless is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advisor Semiconductor and Wireless Portfolio Wireless in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wireless 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 Semiconductors are associated (or correlated) with Wireless Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wireless Portfolio has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and Wireless Portfolio go up and down completely randomly.

Pair Corralation between Fidelity Advisor and Wireless Portfolio

Assuming the 90 days horizon Fidelity Advisor Semiconductors is expected to generate 2.02 times more return on investment than Wireless Portfolio. However, Fidelity Advisor is 2.02 times more volatile than Wireless Portfolio Wireless. It trades about 0.0 of its potential returns per unit of risk. Wireless Portfolio Wireless is currently generating about -0.06 per unit of risk. If you would invest  8,707  in Fidelity Advisor Semiconductors on October 9, 2024 and sell it today you would lose (133.00) from holding Fidelity Advisor Semiconductors or give up 1.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Fidelity Advisor Semiconductor  vs.  Wireless Portfolio Wireless

Fidelity Advisor Sem

Risk-Adjusted Performance

0 of 100

Very Weak

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

Wireless Portfolio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wireless Portfolio Wireless has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Wireless Portfolio 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 Wireless Portfolio

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

The idea behind Fidelity Advisor Semiconductors and Wireless Portfolio Wireless 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.