Correlation Between Fidelity Advisor and Telecommunications

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

Diversification Opportunities for Fidelity Advisor and Telecommunications

0.59
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Fidelity and Telecommunications is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advisor Semiconductor and Telecommunications Portfolio F in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telecommunications 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 Telecommunications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telecommunications has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and Telecommunications go up and down completely randomly.

Pair Corralation between Fidelity Advisor and Telecommunications

Assuming the 90 days horizon Fidelity Advisor Semiconductors is expected to generate 1.9 times more return on investment than Telecommunications. However, Fidelity Advisor is 1.9 times more volatile than Telecommunications Portfolio Fidelity. It trades about 0.1 of its potential returns per unit of risk. Telecommunications Portfolio Fidelity is currently generating about 0.15 per unit of risk. If you would invest  6,365  in Fidelity Advisor Semiconductors on September 11, 2024 and sell it today you would earn a total of  640.00  from holding Fidelity Advisor Semiconductors or generate 10.05% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Fidelity Advisor Semiconductor  vs.  Telecommunications Portfolio F

 Performance 
       Timeline  
Fidelity Advisor Sem 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Semiconductors are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Fidelity Advisor may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Telecommunications 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Telecommunications Portfolio Fidelity are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Telecommunications may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fidelity Advisor and Telecommunications Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fidelity Advisor and Telecommunications

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

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