Correlation Between Six Circles and Fidelity Advisor

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

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

Diversification Opportunities for Six Circles and Fidelity Advisor

0.59

Correlation Coefficient

Six Circles  Fidelity Advisor

Very weak diversification

The 3 months correlation between Six and Fidelity is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Six Circles Credit 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 Six Circles 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 Six Circles Credit 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 Six Circles i.e., Six Circles and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Six Circles and Fidelity Advisor

Assuming the 90 days horizon Six Circles is expected to generate 12.08 times less return on investment than Fidelity Advisor. But when comparing it to its historical volatility, Six Circles Credit is 5.42 times less risky than Fidelity Advisor. It trades about 0.05 of its potential returns per unit of risk. Fidelity Advisor Technology is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  14,456  in Fidelity Advisor Technology on September 13, 2024 and sell it today you would earn a total of  364.00  from holding Fidelity Advisor Technology or generate 2.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Six Circles Credit  vs.  Fidelity Advisor Technology

Six Circles Credit

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Six Circles Credit are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Six Circles is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Advisor Tec

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Technology are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical indicators, Fidelity Advisor showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Six Circles and Fidelity Advisor

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

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.