Correlation Between Fidelity America and Esfera Robotics

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

By analyzing existing cross correlation between Fidelity America AD and Esfera Robotics R, you can compare the effects of market volatilities on Fidelity America and Esfera Robotics 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 America with a short position of Esfera Robotics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity America and Esfera Robotics.

Diversification Opportunities for Fidelity America and Esfera Robotics

0.9

Correlation Coefficient

Fidelity America  Esfera Robotics

Almost no diversification

The 3 months correlation between Fidelity and Esfera is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity America AD and Esfera Robotics R in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esfera Robotics R and Fidelity America 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 America AD are associated (or correlated) with Esfera Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Esfera Robotics R has no effect on the direction of Fidelity America i.e., Fidelity America and Esfera Robotics go up and down completely randomly.

Pair Corralation between Fidelity America and Esfera Robotics

Assuming the 90 days trading horizon Fidelity America AD is expected to generate 0.63 times more return on investment than Esfera Robotics. However, Fidelity America AD is 1.58 times less risky than Esfera Robotics. It trades about -0.09 of its potential returns per unit of risk. Esfera Robotics R is currently generating about -0.08 per unit of risk. If you would invest  1,566  in Fidelity America AD on December 24, 2024 and sell it today you would lose (75.00) from holding Fidelity America AD or give up 4.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.33%
Values	Daily Returns

Fidelity America AD  vs.  Esfera Robotics R

Fidelity America

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity America AD has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound technical and fundamental indicators, Fidelity America is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Esfera Robotics R

Risk-Adjusted Performance

Very Weak

Over the last 90 days Esfera Robotics R has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Esfera Robotics 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 America and Esfera Robotics

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

The idea behind Fidelity America AD and Esfera Robotics R 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.