Correlation Between Chestnut Street and Fidelity Advisor

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

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

Diversification Opportunities for Chestnut Street and Fidelity Advisor

0.56

Correlation Coefficient

Chestnut Street  Fidelity Advisor

Very weak diversification

The 3 months correlation between Chestnut and Fidelity is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Chestnut Street Exchange and Fidelity Advisor Sumer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Sumer and Chestnut Street 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 Chestnut Street Exchange 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 Sumer has no effect on the direction of Chestnut Street i.e., Chestnut Street and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Chestnut Street and Fidelity Advisor

Assuming the 90 days horizon Chestnut Street is expected to generate 2.62 times less return on investment than Fidelity Advisor. But when comparing it to its historical volatility, Chestnut Street Exchange is 1.67 times less risky than Fidelity Advisor. It trades about 0.19 of its potential returns per unit of risk. Fidelity Advisor Sumer is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  4,300  in Fidelity Advisor Sumer on September 12, 2024 and sell it today you would earn a total of  925.00  from holding Fidelity Advisor Sumer or generate 21.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Chestnut Street Exchange  vs.  Fidelity Advisor Sumer

Chestnut Street Exchange

Risk-Adjusted Performance

15 of 100

Good

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

Fidelity Advisor Sumer

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Sumer are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Fidelity Advisor showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chestnut Street and Fidelity Advisor

The main advantage of trading using opposite Chestnut Street and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chestnut Street 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 Chestnut Street Exchange and Fidelity Advisor Sumer 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.