Correlation Between Fidelity Advisor and Eaton Vance

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

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

Diversification Opportunities for Fidelity Advisor and Eaton Vance

-0.09

Correlation Coefficient

Fidelity Advisor  Eaton Vance

Good diversification

The 3 months correlation between Fidelity and Eaton is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advisor Energy and Eaton Vance Tax Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Tax 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 Energy are associated (or correlated) with Eaton Vance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton Vance Tax has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and Eaton Vance go up and down completely randomly.

Pair Corralation between Fidelity Advisor and Eaton Vance

Assuming the 90 days horizon Fidelity Advisor Energy is expected to generate 1.82 times more return on investment than Eaton Vance. However, Fidelity Advisor is 1.82 times more volatile than Eaton Vance Tax Managed. It trades about 0.03 of its potential returns per unit of risk. Eaton Vance Tax Managed is currently generating about 0.01 per unit of risk. If you would invest  4,744  in Fidelity Advisor Energy on September 17, 2024 and sell it today you would earn a total of  73.00  from holding Fidelity Advisor Energy or generate 1.54% return on investment over 90 days.

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

Fidelity Advisor Energy  vs.  Eaton Vance Tax Managed

Fidelity Advisor Energy

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Energy are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. 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.

Eaton Vance Tax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eaton Vance Tax Managed has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Eaton Vance 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 Eaton Vance

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

The idea behind Fidelity Advisor Energy and Eaton Vance Tax Managed 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.