Correlation Between Schwab Fundamental and Fidelity Advisor

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

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

Diversification Opportunities for Schwab Fundamental and Fidelity Advisor

-0.05

Correlation Coefficient

Schwab Fundamental  Fidelity Advisor

Good diversification

The 3 months correlation between Schwab and Fidelity is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Schwab Fundamental Internation and Fidelity Advisor Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Fin and Schwab Fundamental 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 Schwab Fundamental International 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 Fin has no effect on the direction of Schwab Fundamental i.e., Schwab Fundamental and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Schwab Fundamental and Fidelity Advisor

Assuming the 90 days horizon Schwab Fundamental International is expected to generate 0.66 times more return on investment than Fidelity Advisor. However, Schwab Fundamental International is 1.52 times less risky than Fidelity Advisor. It trades about 0.2 of its potential returns per unit of risk. Fidelity Advisor Financial is currently generating about 0.0 per unit of risk. If you would invest  1,234  in Schwab Fundamental International on December 21, 2024 and sell it today you would earn a total of  113.00  from holding Schwab Fundamental International or generate 9.16% return on investment over 90 days.

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

Schwab Fundamental Internation  vs.  Fidelity Advisor Financial

Schwab Fundamental

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Schwab Fundamental International are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Schwab Fundamental may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Fidelity Advisor Fin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity Advisor Financial has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, 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 Schwab Fundamental and Fidelity Advisor

The main advantage of trading using opposite Schwab Fundamental and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schwab Fundamental 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 Schwab Fundamental International and Fidelity Advisor Financial 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.