Correlation Between Fidelity Advisor and Columbia Seligman

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

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

Diversification Opportunities for Fidelity Advisor and Columbia Seligman

-0.31

Correlation Coefficient

Fidelity Advisor  Columbia Seligman

Very good diversification

The 3 months correlation between Fidelity and Columbia is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advisor Health and Columbia Seligman Munications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Seligman 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 Health are associated (or correlated) with Columbia Seligman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Seligman has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and Columbia Seligman go up and down completely randomly.

Pair Corralation between Fidelity Advisor and Columbia Seligman

Assuming the 90 days horizon Fidelity Advisor is expected to generate 2.2 times less return on investment than Columbia Seligman. But when comparing it to its historical volatility, Fidelity Advisor Health is 1.05 times less risky than Columbia Seligman. It trades about 0.11 of its potential returns per unit of risk. Columbia Seligman Munications is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  13,335  in Columbia Seligman Munications on August 31, 2024 and sell it today you would earn a total of  710.00  from holding Columbia Seligman Munications or generate 5.32% return on investment over 90 days.

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

Fidelity Advisor Health  vs.  Columbia Seligman Munications

Fidelity Advisor Health

Risk-Adjusted Performance

0 of 100

Very Weak

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

Columbia Seligman

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Seligman Munications are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Columbia Seligman showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fidelity Advisor and Columbia Seligman

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

The idea behind Fidelity Advisor Health and Columbia Seligman Munications 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 Commodity Directory module to find actively traded commodities issued by global exchanges.