Correlation Between Ultraemerging Markets and Fidelity Advisor

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

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

Diversification Opportunities for Ultraemerging Markets and Fidelity Advisor

0.12

Correlation Coefficient

Ultraemerging Markets  Fidelity Advisor

Average diversification

The 3 months correlation between Ultraemerging and Fidelity is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Ultraemerging Markets Profund 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 Ultraemerging Markets 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 Ultraemerging Markets Profund 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 Ultraemerging Markets i.e., Ultraemerging Markets and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Ultraemerging Markets and Fidelity Advisor

Assuming the 90 days horizon Ultraemerging Markets Profund is expected to generate 2.24 times more return on investment than Fidelity Advisor. However, Ultraemerging Markets is 2.24 times more volatile than Fidelity Advisor Energy. It trades about 0.1 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  4,951  in Ultraemerging Markets Profund on December 25, 2024 and sell it today you would earn a total of  791.00  from holding Ultraemerging Markets Profund or generate 15.98% return on investment over 90 days.

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

Ultraemerging Markets Profund  vs.  Fidelity Advisor Energy

Ultraemerging Markets

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ultraemerging Markets Profund are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly unsteady forward indicators, Ultraemerging Markets showed solid returns over the last few months and may actually be approaching a breakup point.

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 forward indicators, Fidelity Advisor may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ultraemerging Markets and Fidelity Advisor

The main advantage of trading using opposite Ultraemerging Markets and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultraemerging Markets 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 Ultraemerging Markets Profund 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.