Correlation Between Wegener and Fidelity Advisor

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

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

Diversification Opportunities for Wegener and Fidelity Advisor

0.77

Correlation Coefficient

Wegener  Fidelity Advisor

Poor diversification

The 3 months correlation between Wegener and Fidelity is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Wegener and Fidelity Advisor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Tec and Wegener 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 Wegener 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 Tec has no effect on the direction of Wegener i.e., Wegener and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Wegener and Fidelity Advisor

If you would invest  8,452  in Fidelity Advisor Technology on September 13, 2024 and sell it today you would earn a total of  1,246  from holding Fidelity Advisor Technology or generate 14.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.59%
Values	Daily Returns

Wegener  vs.  Fidelity Advisor Technology

Wegener

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wegener has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Wegener is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Fidelity Advisor Tec

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Technology are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Fidelity Advisor showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wegener and Fidelity Advisor

The main advantage of trading using opposite Wegener and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wegener 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 Wegener and Fidelity Advisor Technology 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.