Correlation Between Spirit Of and Fidelity Advisor

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

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

Diversification Opportunities for Spirit Of and Fidelity Advisor

0.54

Correlation Coefficient

Spirit Of  Fidelity Advisor

Very weak diversification

The 3 months correlation between Spirit and Fidelity is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Spirit Of America and Fidelity Advisor Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Div and Spirit Of 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 Spirit Of America 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 Div has no effect on the direction of Spirit Of i.e., Spirit Of and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Spirit Of and Fidelity Advisor

Assuming the 90 days horizon Spirit Of America is expected to generate 0.99 times more return on investment than Fidelity Advisor. However, Spirit Of America is 1.01 times less risky than Fidelity Advisor. It trades about 0.11 of its potential returns per unit of risk. Fidelity Advisor Diversified is currently generating about -0.1 per unit of risk. If you would invest  922.00  in Spirit Of America on December 21, 2024 and sell it today you would earn a total of  75.00  from holding Spirit Of America or generate 8.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Spirit Of America  vs.  Fidelity Advisor Diversified

Spirit Of America

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Spirit Of America are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Spirit Of may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Fidelity Advisor Div

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity Advisor Diversified has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Spirit Of and Fidelity Advisor

The main advantage of trading using opposite Spirit Of and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirit Of 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 Spirit Of America and Fidelity Advisor Diversified 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.