Correlation Between Fidelity Advisor and Transamerica Large

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

Diversification Opportunities for Fidelity Advisor and Transamerica Large

0.55

Correlation Coefficient

Fidelity Advisor  Transamerica Large

Very weak diversification

The 3 months correlation between Fidelity and Transamerica is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advisor Financial and Transamerica Large Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Large Core 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 Transamerica Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Large Core has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and Transamerica Large go up and down completely randomly.

Pair Corralation between Fidelity Advisor and Transamerica Large

Assuming the 90 days horizon Fidelity Advisor Financial is expected to generate 0.37 times more return on investment than Transamerica Large. However, Fidelity Advisor Financial is 2.69 times less risky than Transamerica Large. It trades about -0.07 of its potential returns per unit of risk. Transamerica Large Core is currently generating about -0.16 per unit of risk. If you would invest  3,881  in Fidelity Advisor Financial on October 22, 2024 and sell it today you would lose (122.00) from holding Fidelity Advisor Financial or give up 3.14% of portfolio value over 90 days.

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

Fidelity Advisor Financial  vs.  Transamerica Large Core

Fidelity Advisor Fin

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Financial are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. 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.

Transamerica Large Core

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transamerica Large Core 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.

Pair Trading with Fidelity Advisor and Transamerica Large

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

The idea behind Fidelity Advisor Financial and Transamerica Large Core 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.