Correlation Between Fidelity Advisor and Sterling Capital

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

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

Diversification Opportunities for Fidelity Advisor and Sterling Capital

0.86

Correlation Coefficient

Fidelity Advisor  Sterling Capital

Very poor diversification

The 3 months correlation between Fidelity and Sterling is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advisor Financial and Sterling Capital Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Equity 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 Financial are associated (or correlated) with Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Equity has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and Sterling Capital go up and down completely randomly.

Pair Corralation between Fidelity Advisor and Sterling Capital

Assuming the 90 days horizon Fidelity Advisor Financial is expected to under-perform the Sterling Capital. In addition to that, Fidelity Advisor is 1.59 times more volatile than Sterling Capital Equity. It trades about 0.0 of its total potential returns per unit of risk. Sterling Capital Equity is currently generating about 0.01 per unit of volatility. If you would invest  2,145  in Sterling Capital Equity on December 22, 2024 and sell it today you would earn a total of  4.00  from holding Sterling Capital Equity or generate 0.19% return on investment over 90 days.

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

Fidelity Advisor Financial  vs.  Sterling Capital Equity

Fidelity Advisor Fin

Risk-Adjusted Performance

Very Weak

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

Sterling Capital Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sterling Capital Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Sterling Capital 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 Sterling Capital

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

The idea behind Fidelity Advisor Financial and Sterling Capital Equity 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.