Correlation Between Columbia Select and Fidelity Advisor

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

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

Diversification Opportunities for Columbia Select and Fidelity Advisor

0.81

Correlation Coefficient

Columbia Select  Fidelity Advisor

Very poor diversification

The 3 months correlation between Columbia and Fidelity is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Select Large Cap and Fidelity Advisor Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Large and Columbia Select 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 Columbia Select Large Cap 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 Large has no effect on the direction of Columbia Select i.e., Columbia Select and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Columbia Select and Fidelity Advisor

Assuming the 90 days horizon Columbia Select is expected to generate 8.86 times less return on investment than Fidelity Advisor. In addition to that, Columbia Select is 1.0 times more volatile than Fidelity Advisor Large. It trades about 0.02 of its total potential returns per unit of risk. Fidelity Advisor Large is currently generating about 0.18 per unit of volatility. If you would invest  5,164  in Fidelity Advisor Large on September 16, 2024 and sell it today you would earn a total of  397.00  from holding Fidelity Advisor Large or generate 7.69% return on investment over 90 days.

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

Columbia Select Large Cap  vs.  Fidelity Advisor Large

Columbia Select Large

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Select Large Cap are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Columbia Select is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Advisor Large

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Large are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Fidelity Advisor may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Columbia Select and Fidelity Advisor

The main advantage of trading using opposite Columbia Select and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Select 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 Columbia Select Large Cap and Fidelity Advisor Large 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.