Correlation Between Prudential Government and Fidelity Advisor

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

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

Diversification Opportunities for Prudential Government and Fidelity Advisor

0.0

Correlation Coefficient

Prudential Government  Fidelity Advisor

Pay attention - limited upside

The 3 months correlation between Prudential and Fidelity is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Government Money and Fidelity Advisor Freedom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Freedom and Prudential Government 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 Prudential Government Money 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 Freedom has no effect on the direction of Prudential Government i.e., Prudential Government and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Prudential Government and Fidelity Advisor

Assuming the 90 days horizon Prudential Government is expected to generate 18.13 times less return on investment than Fidelity Advisor. In addition to that, Prudential Government is 1.53 times more volatile than Fidelity Advisor Freedom. It trades about 0.0 of its total potential returns per unit of risk. Fidelity Advisor Freedom is currently generating about 0.08 per unit of volatility. If you would invest  957.00  in Fidelity Advisor Freedom on September 26, 2024 and sell it today you would earn a total of  135.00  from holding Fidelity Advisor Freedom or generate 14.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	91.73%
Values	Daily Returns

Prudential Government Money  vs.  Fidelity Advisor Freedom

Prudential Government

Risk-Adjusted Performance

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Very Weak

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

Fidelity Advisor Freedom

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Advisor Freedom has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and 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 Prudential Government and Fidelity Advisor

The main advantage of trading using opposite Prudential Government and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Government 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 Prudential Government Money and Fidelity Advisor Freedom 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.