Correlation Between Intrepid Capital and Fidelity Advisor

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

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

Diversification Opportunities for Intrepid Capital and Fidelity Advisor

0.91

Correlation Coefficient

Intrepid Capital  Fidelity Advisor

Almost no diversification

The 3 months correlation between Intrepid and Fidelity is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Intrepid Capital Fund and Fidelity Advisor Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Growth and Intrepid Capital 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 Intrepid Capital Fund 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 Growth has no effect on the direction of Intrepid Capital i.e., Intrepid Capital and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Intrepid Capital and Fidelity Advisor

Assuming the 90 days horizon Intrepid Capital is expected to generate 1.85 times less return on investment than Fidelity Advisor. But when comparing it to its historical volatility, Intrepid Capital Fund is 1.81 times less risky than Fidelity Advisor. It trades about 0.22 of its potential returns per unit of risk. Fidelity Advisor Growth is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  15,690  in Fidelity Advisor Growth on September 15, 2024 and sell it today you would earn a total of  2,420  from holding Fidelity Advisor Growth or generate 15.42% return on investment over 90 days.

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

Intrepid Capital Fund  vs.  Fidelity Advisor Growth

Intrepid Capital

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Intrepid Capital Fund are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental drivers, Intrepid Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fidelity Advisor Growth

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Growth are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Fidelity Advisor showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intrepid Capital and Fidelity Advisor

The main advantage of trading using opposite Intrepid Capital and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intrepid Capital 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 Intrepid Capital Fund and Fidelity Advisor Growth 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.