Correlation Between William Blair and Fidelity Advisor

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

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

Diversification Opportunities for William Blair and Fidelity Advisor

0.68

Correlation Coefficient

William Blair  Fidelity Advisor

Poor diversification

The 3 months correlation between William and Fidelity is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding William Blair Small Mid 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 William Blair 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 William Blair Small Mid 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 William Blair i.e., William Blair and Fidelity Advisor go up and down completely randomly.

Pair Corralation between William Blair and Fidelity Advisor

Assuming the 90 days horizon William Blair Small Mid is expected to generate 1.03 times more return on investment than Fidelity Advisor. However, William Blair is 1.03 times more volatile than Fidelity Advisor Energy. It trades about -0.04 of its potential returns per unit of risk. Fidelity Advisor Energy is currently generating about -0.14 per unit of risk. If you would invest  3,336  in William Blair Small Mid on September 12, 2024 and sell it today you would lose (29.00) from holding William Blair Small Mid or give up 0.87% of portfolio value over 90 days.

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

William Blair Small Mid  vs.  Fidelity Advisor Energy

William Blair Small

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in William Blair Small Mid are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, William Blair may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fidelity Advisor Energy

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Energy are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Fidelity Advisor may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with William Blair and Fidelity Advisor

The main advantage of trading using opposite William Blair and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if William Blair 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 William Blair Small Mid 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.