Correlation Between Fidelity Advisor and Deutsche Small

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

Diversification Opportunities for Fidelity Advisor and Deutsche Small

-0.39

Correlation Coefficient

Fidelity Advisor  Deutsche Small

Very good diversification

The 3 months correlation between Fidelity and Deutsche is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advisor Diversified and Deutsche Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Small Cap 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 Deutsche Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Small Cap has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and Deutsche Small go up and down completely randomly.

Pair Corralation between Fidelity Advisor and Deutsche Small

Assuming the 90 days horizon Fidelity Advisor Diversified is expected to under-perform the Deutsche Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Fidelity Advisor Diversified is 1.28 times less risky than Deutsche Small. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Deutsche Small Cap is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  4,765  in Deutsche Small Cap on September 12, 2024 and sell it today you would earn a total of  621.00  from holding Deutsche Small Cap or generate 13.03% 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.  Deutsche Small Cap

Fidelity Advisor Div

Risk-Adjusted Performance

0 of 100

Very Weak

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

Deutsche Small Cap

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Small Cap are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Deutsche Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Fidelity Advisor and Deutsche Small

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

The idea behind Fidelity Advisor Diversified and Deutsche Small Cap 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.