Correlation Between Multi Strategy and Fidelity Advisor

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

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

Diversification Opportunities for Multi Strategy and Fidelity Advisor

-0.17

Correlation Coefficient

Multi Strategy  Fidelity Advisor

Good diversification

The 3 months correlation between Multi and Fidelity is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding The Multi Strategy Growth and Fidelity Advisor Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Health and Multi Strategy 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 The Multi Strategy 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 Health has no effect on the direction of Multi Strategy i.e., Multi Strategy and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Multi Strategy and Fidelity Advisor

Assuming the 90 days horizon Multi Strategy is expected to generate 1.86 times less return on investment than Fidelity Advisor. But when comparing it to its historical volatility, The Multi Strategy Growth is 2.42 times less risky than Fidelity Advisor. It trades about 0.03 of its potential returns per unit of risk. Fidelity Advisor Health is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  4,216  in Fidelity Advisor Health on September 26, 2024 and sell it today you would earn a total of  423.00  from holding Fidelity Advisor Health or generate 10.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

The Multi Strategy Growth  vs.  Fidelity Advisor Health

Multi Strategy

Risk-Adjusted Performance

0 of 100

Very Weak

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

Fidelity Advisor Health

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Multi Strategy and Fidelity Advisor

The main advantage of trading using opposite Multi Strategy and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi Strategy 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 The Multi Strategy Growth and Fidelity Advisor Health 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.