Correlation Between Fidelity Advisor and Hartford Growth

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

Diversification Opportunities for Fidelity Advisor and Hartford Growth

0.89

Correlation Coefficient

Fidelity Advisor  Hartford Growth

Very poor diversification

The 3 months correlation between Fidelity and Hartford is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advisor Financial and The Hartford Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Growth 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 Hartford Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Growth has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and Hartford Growth go up and down completely randomly.

Pair Corralation between Fidelity Advisor and Hartford Growth

Assuming the 90 days horizon Fidelity Advisor Financial is expected to generate 1.22 times more return on investment than Hartford Growth. However, Fidelity Advisor is 1.22 times more volatile than The Hartford Growth. It trades about 0.21 of its potential returns per unit of risk. The Hartford Growth is currently generating about 0.24 per unit of risk. If you would invest  3,426  in Fidelity Advisor Financial on September 4, 2024 and sell it today you would earn a total of  615.00  from holding Fidelity Advisor Financial or generate 17.95% 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.  The Hartford Growth

Fidelity Advisor Fin

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Financial are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental drivers, Fidelity Advisor showed solid returns over the last few months and may actually be approaching a breakup point.

Hartford Growth

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Growth are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Hartford Growth showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fidelity Advisor and Hartford Growth

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

The idea behind Fidelity Advisor Financial and The Hartford Growth 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.