Correlation Between AES and Fidelity Advisor

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

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

Diversification Opportunities for AES and Fidelity Advisor

-0.48

Correlation Coefficient

AES  Fidelity Advisor

Very good diversification

The 3 months correlation between AES and Fidelity is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding The AES and Fidelity Advisor Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Uti and AES 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 The AES 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 Uti has no effect on the direction of AES i.e., AES and Fidelity Advisor go up and down completely randomly.

Pair Corralation between AES and Fidelity Advisor

Considering the 90-day investment horizon The AES is expected to under-perform the Fidelity Advisor. In addition to that, AES is 2.23 times more volatile than Fidelity Advisor Utilities. It trades about -0.2 of its total potential returns per unit of risk. Fidelity Advisor Utilities is currently generating about 0.05 per unit of volatility. If you would invest  4,504  in Fidelity Advisor Utilities on September 16, 2024 and sell it today you would earn a total of  137.00  from holding Fidelity Advisor Utilities or generate 3.04% return on investment over 90 days.

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

The AES  vs.  Fidelity Advisor Utilities

AES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The AES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Fidelity Advisor Uti

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Utilities are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, 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 AES and Fidelity Advisor

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