Correlation Between Goldman Sachs and Fidelity Advisor

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

By analyzing existing cross correlation between Goldman Sachs Growth and Fidelity Advisor Utilities, you can compare the effects of market volatilities on Goldman Sachs 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 Goldman Sachs with a short position of Fidelity Advisor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Fidelity Advisor.

Diversification Opportunities for Goldman Sachs and Fidelity Advisor

0.81

Correlation Coefficient

Goldman Sachs  Fidelity Advisor

Very poor diversification

The 3 months correlation between GOLDMAN and Fidelity is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Growth and Fidelity Advisor Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Uti and Goldman Sachs 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 Goldman Sachs Growth 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 Uti has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Goldman Sachs and Fidelity Advisor

Assuming the 90 days horizon Goldman Sachs Growth is expected to generate 0.87 times more return on investment than Fidelity Advisor. However, Goldman Sachs Growth is 1.15 times less risky than Fidelity Advisor. It trades about 0.36 of its potential returns per unit of risk. Fidelity Advisor Utilities is currently generating about 0.15 per unit of risk. If you would invest  1,910  in Goldman Sachs Growth on September 4, 2024 and sell it today you would earn a total of  469.00  from holding Goldman Sachs Growth or generate 24.55% return on investment over 90 days.

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

Goldman Sachs Growth  vs.  Fidelity Advisor Utilities

Goldman Sachs Growth

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Growth are ranked lower than 28 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Goldman Sachs showed solid returns over the last few months and may actually be approaching a breakup point.

Fidelity Advisor Uti

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Utilities are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Fidelity Advisor may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Goldman Sachs and Fidelity Advisor

The main advantage of trading using opposite Goldman Sachs and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs 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.

The idea behind Goldman Sachs Growth and Fidelity Advisor Utilities 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.