Correlation Between GM and Fidelity Advisorâ®

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

By analyzing existing cross correlation between General Motors and Fidelity Advisor Sustainable, you can compare the effects of market volatilities on GM and Fidelity Advisorâ® 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 GM with a short position of Fidelity Advisorâ®. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Fidelity Advisorâ®.

Diversification Opportunities for GM and Fidelity Advisorâ®

-0.29

Correlation Coefficient

GM  Fidelity Advisorâ®

Very good diversification

The 3 months correlation between GM and Fidelity is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Fidelity Advisor Sustainable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Sus and GM 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 General Motors are associated (or correlated) with Fidelity Advisorâ®. 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 Sus has no effect on the direction of GM i.e., GM and Fidelity Advisorâ® go up and down completely randomly.

Pair Corralation between GM and Fidelity Advisorâ®

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Fidelity Advisorâ®. In addition to that, GM is 3.47 times more volatile than Fidelity Advisor Sustainable. It trades about -0.03 of its total potential returns per unit of risk. Fidelity Advisor Sustainable is currently generating about 0.0 per unit of volatility. If you would invest  1,044  in Fidelity Advisor Sustainable on December 26, 2024 and sell it today you would lose (3.00) from holding Fidelity Advisor Sustainable or give up 0.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

General Motors  vs.  Fidelity Advisor Sustainable

General Motors

Risk-Adjusted Performance

Very Weak

Over the last 90 days General Motors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, GM is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Fidelity Advisor Sus

Risk-Adjusted Performance

Very Weak

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

Pair Trading with GM and Fidelity Advisorâ®

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

The idea behind General Motors and Fidelity Advisor Sustainable 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.