Correlation Between Fidelity Advisor and Nasdaq-100(r)

Can any of the company-specific risk be diversified away by investing in both Fidelity Advisor and Nasdaq-100(r) 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 Nasdaq-100(r) 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 Nasdaq 100 2x Strategy, you can compare the effects of market volatilities on Fidelity Advisor and Nasdaq-100(r) 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 Nasdaq-100(r). Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Advisor and Nasdaq-100(r).

Diversification Opportunities for Fidelity Advisor and Nasdaq-100(r)

0.23

Correlation Coefficient

Fidelity Advisor  Nasdaq-100(r)

Modest diversification

The 3 months correlation between Fidelity and Nasdaq-100(r) is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advisor Energy and Nasdaq 100 2x Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 2x 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 Nasdaq-100(r). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq 100 2x has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and Nasdaq-100(r) go up and down completely randomly.

Pair Corralation between Fidelity Advisor and Nasdaq-100(r)

Assuming the 90 days horizon Fidelity Advisor is expected to generate 17.94 times less return on investment than Nasdaq-100(r). But when comparing it to its historical volatility, Fidelity Advisor Energy is 1.67 times less risky than Nasdaq-100(r). It trades about 0.01 of its potential returns per unit of risk. Nasdaq 100 2x Strategy is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  15,336  in Nasdaq 100 2x Strategy on October 5, 2024 and sell it today you would earn a total of  23,230  from holding Nasdaq 100 2x Strategy or generate 151.47% return on investment over 90 days.

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

Fidelity Advisor Energy  vs.  Nasdaq 100 2x Strategy

Fidelity Advisor Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Advisor Energy has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Nasdaq 100 2x

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq 100 2x Strategy are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Nasdaq-100(r) 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 Nasdaq-100(r)

The main advantage of trading using opposite Fidelity Advisor and Nasdaq-100(r) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Advisor position performs unexpectedly, Nasdaq-100(r) 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 Nasdaq-100(r) will offset losses from the drop in Nasdaq-100(r)'s long position.

The idea behind Fidelity Advisor Energy and Nasdaq 100 2x Strategy 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.