Correlation Between Prudential High and Fidelity Advisor

Can any of the company-specific risk be diversified away by investing in both Prudential High 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 High 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 High Yield and Fidelity Advisor Gold, you can compare the effects of market volatilities on Prudential High 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 High with a short position of Fidelity Advisor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential High and Fidelity Advisor.

Diversification Opportunities for Prudential High and Fidelity Advisor

-0.24

Correlation Coefficient

Prudential High  Fidelity Advisor

Very good diversification

The 3 months correlation between Prudential and Fidelity is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Prudential High Yield and Fidelity Advisor Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Gold and Prudential High 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 High Yield 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 Gold has no effect on the direction of Prudential High i.e., Prudential High and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Prudential High and Fidelity Advisor

Assuming the 90 days horizon Prudential High is expected to generate 1.51 times less return on investment than Fidelity Advisor. But when comparing it to its historical volatility, Prudential High Yield is 10.21 times less risky than Fidelity Advisor. It trades about 0.12 of its potential returns per unit of risk. Fidelity Advisor Gold is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,804  in Fidelity Advisor Gold on September 12, 2024 and sell it today you would earn a total of  29.00  from holding Fidelity Advisor Gold or generate 1.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Prudential High Yield  vs.  Fidelity Advisor Gold

Prudential High Yield

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential High Yield are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Prudential High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Advisor Gold

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Gold are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward 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 High and Fidelity Advisor

The main advantage of trading using opposite Prudential High and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential High 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 High Yield and Fidelity Advisor Gold 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.