Correlation Between Fidelity Advisor and Large Cap

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

Diversification Opportunities for Fidelity Advisor and Large Cap

-0.03

Correlation Coefficient

Fidelity Advisor  Large Cap

Good diversification

The 3 months correlation between Fidelity and Large is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advisor Diversified and Large Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Cap Value 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 Large Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Large Cap Value has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and Large Cap go up and down completely randomly.

Pair Corralation between Fidelity Advisor and Large Cap

Assuming the 90 days horizon Fidelity Advisor Diversified is expected to generate 1.0 times more return on investment than Large Cap. However, Fidelity Advisor Diversified is 1.0 times less risky than Large Cap. It trades about 0.1 of its potential returns per unit of risk. Large Cap Value is currently generating about -0.02 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Fidelity Advisor Diversified  vs.  Large Cap Value

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.

Large Cap Value

Risk-Adjusted Performance

Very Weak

Over the last 90 days Large Cap Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Large Cap 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 Large Cap

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

The idea behind Fidelity Advisor Diversified and Large Cap Value 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.