Correlation Between Precious Metals and Fidelity Advisor

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

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

Diversification Opportunities for Precious Metals and Fidelity Advisor

-0.51

Correlation Coefficient

Precious Metals  Fidelity Advisor

Excellent diversification

The 3 months correlation between Precious and Fidelity is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Precious Metals Ultrasector and Fidelity Advisor Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Energy and Precious Metals 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 Precious Metals Ultrasector 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 Energy has no effect on the direction of Precious Metals i.e., Precious Metals and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Precious Metals and Fidelity Advisor

Assuming the 90 days horizon Precious Metals Ultrasector is expected to generate 3.11 times more return on investment than Fidelity Advisor. However, Precious Metals is 3.11 times more volatile than Fidelity Advisor Energy. It trades about 0.09 of its potential returns per unit of risk. Fidelity Advisor Energy is currently generating about -0.17 per unit of risk. If you would invest  4,123  in Precious Metals Ultrasector on September 16, 2024 and sell it today you would earn a total of  209.00  from holding Precious Metals Ultrasector or generate 5.07% return on investment over 90 days.

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

Precious Metals Ultrasector  vs.  Fidelity Advisor Energy

Precious Metals Ultr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Precious Metals Ultrasector 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 January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Fidelity Advisor Energy

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Energy are ranked lower than 3 (%) 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 Precious Metals and Fidelity Advisor

The main advantage of trading using opposite Precious Metals and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Precious Metals 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 Precious Metals Ultrasector and Fidelity Advisor Energy 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.