Correlation Between Swan Defined and Fidelity Advisor

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

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

Diversification Opportunities for Swan Defined and Fidelity Advisor

-0.6

Correlation Coefficient

Swan Defined  Fidelity Advisor

Excellent diversification

The 3 months correlation between Swan and Fidelity is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Swan Defined Risk 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 Swan Defined 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 Swan Defined Risk 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 Swan Defined i.e., Swan Defined and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Swan Defined and Fidelity Advisor

Assuming the 90 days horizon Swan Defined Risk is expected to under-perform the Fidelity Advisor. In addition to that, Swan Defined is 2.96 times more volatile than Fidelity Advisor Gold. It trades about -0.14 of its total potential returns per unit of risk. Fidelity Advisor Gold is currently generating about 0.28 per unit of volatility. If you would invest  2,482  in Fidelity Advisor Gold on December 22, 2024 and sell it today you would earn a total of  735.00  from holding Fidelity Advisor Gold or generate 29.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	83.33%
Values	Daily Returns

Swan Defined Risk  vs.  Fidelity Advisor Gold

Swan Defined Risk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Swan Defined Risk 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 forward 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 Gold

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Gold are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Fidelity Advisor showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Swan Defined and Fidelity Advisor

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

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.