Correlation Between Pace Large and Fidelity Advisor

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

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

Diversification Opportunities for Pace Large and Fidelity Advisor

0.39

Correlation Coefficient

Pace Large  Fidelity Advisor

Weak diversification

The 3 months correlation between Pace and Fidelity is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Pace Large Value and Fidelity Advisor Sumer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Sumer and Pace Large 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 Pace Large Value 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 Sumer has no effect on the direction of Pace Large i.e., Pace Large and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Pace Large and Fidelity Advisor

Assuming the 90 days horizon Pace Large Value is expected to under-perform the Fidelity Advisor. But the mutual fund apears to be less risky and, when comparing its historical volatility, Pace Large Value is 1.24 times less risky than Fidelity Advisor. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Fidelity Advisor Sumer is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,230  in Fidelity Advisor Sumer on October 23, 2024 and sell it today you would earn a total of  300.00  from holding Fidelity Advisor Sumer or generate 9.29% return on investment over 90 days.

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

Pace Large Value  vs.  Fidelity Advisor Sumer

Pace Large Value

Risk-Adjusted Performance

0 of 100

Very Weak

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

Fidelity Advisor Sumer

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Sumer are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Fidelity Advisor may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Pace Large and Fidelity Advisor

The main advantage of trading using opposite Pace Large and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace Large 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 Pace Large Value and Fidelity Advisor Sumer 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.