Correlation Between Fidelity Advisor and Mainstay Epoch

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

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

Diversification Opportunities for Fidelity Advisor and Mainstay Epoch

-0.05

Correlation Coefficient

Fidelity Advisor  Mainstay Epoch

Good diversification

The 3 months correlation between Fidelity and Mainstay is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advisor Health and Mainstay Epoch Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Epoch Small 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 Health are associated (or correlated) with Mainstay Epoch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Epoch Small has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and Mainstay Epoch go up and down completely randomly.

Pair Corralation between Fidelity Advisor and Mainstay Epoch

Assuming the 90 days horizon Fidelity Advisor Health is expected to under-perform the Mainstay Epoch. But the mutual fund apears to be less risky and, when comparing its historical volatility, Fidelity Advisor Health is 1.18 times less risky than Mainstay Epoch. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Mainstay Epoch Small is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,202  in Mainstay Epoch Small on October 5, 2024 and sell it today you would earn a total of  341.00  from holding Mainstay Epoch Small or generate 15.49% return on investment over 90 days.

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

Fidelity Advisor Health  vs.  Mainstay Epoch Small

Fidelity Advisor Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Advisor Health has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Mainstay Epoch Small

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Fidelity Advisor and Mainstay Epoch

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

The idea behind Fidelity Advisor Health and Mainstay Epoch Small 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.