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 Growth and Fidelity Advisor Strategic, 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

0.51

Correlation Coefficient

Pace Large  Fidelity Advisor

Very weak diversification

The 3 months correlation between Pace and Fidelity is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Pace Large Growth and Fidelity Advisor Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Str 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 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 Str 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 Growth is expected to under-perform the Fidelity Advisor. In addition to that, Pace Large is 7.47 times more volatile than Fidelity Advisor Strategic. It trades about -0.12 of its total potential returns per unit of risk. Fidelity Advisor Strategic is currently generating about 0.01 per unit of volatility. If you would invest  1,172  in Fidelity Advisor Strategic on December 3, 2024 and sell it today you would earn a total of  2.00  from holding Fidelity Advisor Strategic or generate 0.17% return on investment over 90 days.

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

Pace Large Growth  vs.  Fidelity Advisor Strategic

Pace Large Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pace Large Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Fidelity Advisor Str

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Strategic 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 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 Growth and Fidelity Advisor Strategic 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.