Correlation Between Fidelity Advisor and Columbia Treasury

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

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

Diversification Opportunities for Fidelity Advisor and Columbia Treasury

0.8

Correlation Coefficient

Fidelity Advisor  Columbia Treasury

Very poor diversification

The 3 months correlation between Fidelity and Columbia is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advisor Diversified and Columbia Treasury Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Treasury Index 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 Diversified are associated (or correlated) with Columbia Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Treasury Index has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and Columbia Treasury go up and down completely randomly.

Pair Corralation between Fidelity Advisor and Columbia Treasury

Assuming the 90 days horizon Fidelity Advisor Diversified is expected to generate 3.4 times more return on investment than Columbia Treasury. However, Fidelity Advisor is 3.4 times more volatile than Columbia Treasury Index. It trades about 0.1 of its potential returns per unit of risk. Columbia Treasury Index is currently generating about 0.14 per unit of risk. If you would invest  2,533  in Fidelity Advisor Diversified on December 30, 2024 and sell it today you would earn a total of  161.00  from holding Fidelity Advisor Diversified or generate 6.36% return on investment over 90 days.

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

Fidelity Advisor Diversified  vs.  Columbia Treasury Index

Fidelity Advisor Div

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Diversified are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental drivers, Fidelity Advisor may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Columbia Treasury Index

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Treasury Index are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Columbia Treasury 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 Advisor and Columbia Treasury

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

The idea behind Fidelity Advisor Diversified and Columbia Treasury Index 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.