Correlation Between Aqr Global and Fidelity Advisor

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

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

Diversification Opportunities for Aqr Global and Fidelity Advisor

-0.17

Correlation Coefficient

Aqr Global  Fidelity Advisor

Good diversification

The 3 months correlation between Aqr and Fidelity is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Global Macro 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 Aqr Global 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 Aqr Global Macro 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 Aqr Global i.e., Aqr Global and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Aqr Global and Fidelity Advisor

Assuming the 90 days horizon Aqr Global Macro is expected to generate 0.35 times more return on investment than Fidelity Advisor. However, Aqr Global Macro is 2.84 times less risky than Fidelity Advisor. It trades about 0.31 of its potential returns per unit of risk. Fidelity Advisor Energy is currently generating about 0.1 per unit of risk. If you would invest  933.00  in Aqr Global Macro on December 20, 2024 and sell it today you would earn a total of  85.00  from holding Aqr Global Macro or generate 9.11% return on investment over 90 days.

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

Aqr Global Macro  vs.  Fidelity Advisor Energy

Aqr Global Macro

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Global Macro are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Aqr Global may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Fidelity Advisor Energy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Energy 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 April 2025.

Pair Trading with Aqr Global and Fidelity Advisor

The main advantage of trading using opposite Aqr Global and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Global 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 Aqr Global Macro 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.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.