Correlation Between Fidelity Puritan and Fidelity Advisor
Can any of the company-specific risk be diversified away by investing in both Fidelity Puritan and Fidelity Advisor 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 Puritan and Fidelity Advisor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Puritan Fund and Fidelity Advisor Large, you can compare the effects of market volatilities on Fidelity Puritan and Fidelity Advisor 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 Puritan with a short position of Fidelity Advisor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Puritan and Fidelity Advisor.
Diversification Opportunities for Fidelity Puritan and Fidelity Advisor
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Fidelity is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Puritan Fund and Fidelity Advisor Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Large and Fidelity Puritan 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 Puritan Fund are associated (or correlated) with Fidelity Advisor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Advisor Large has no effect on the direction of Fidelity Puritan i.e., Fidelity Puritan and Fidelity Advisor go up and down completely randomly.
Pair Corralation between Fidelity Puritan and Fidelity Advisor
Assuming the 90 days horizon Fidelity Puritan Fund is expected to under-perform the Fidelity Advisor. But the mutual fund apears to be less risky and, when comparing its historical volatility, Fidelity Puritan Fund is 1.09 times less risky than Fidelity Advisor. The mutual fund trades about -0.18 of its potential returns per unit of risk. The Fidelity Advisor Large is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 5,603 in Fidelity Advisor Large on September 24, 2024 and sell it today you would lose (99.00) from holding Fidelity Advisor Large or give up 1.77% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 95.24% |
Values | Daily Returns |
Fidelity Puritan Fund vs. Fidelity Advisor Large
Performance |
Timeline |
Fidelity Puritan |
Fidelity Advisor Large |
Fidelity Puritan and Fidelity Advisor Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fidelity Puritan and Fidelity Advisor
The main advantage of trading using opposite Fidelity Puritan and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Puritan position performs unexpectedly, Fidelity Advisor 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 Fidelity Advisor will offset losses from the drop in Fidelity Advisor's long position.Fidelity Puritan vs. Fidelity Balanced Fund | Fidelity Puritan vs. Fidelity Magellan Fund | Fidelity Puritan vs. Fidelity Growth Income | Fidelity Puritan vs. Fidelity Equity Income Fund |
Fidelity Advisor vs. Fidelity Advisor Large | Fidelity Advisor vs. Fidelity Advisor Large | Fidelity Advisor vs. Columbia Large Cap | Fidelity Advisor vs. Fidelity Advisor Large |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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