Correlation Between Arrow Dwa and Fidelity Advisor

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

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

Diversification Opportunities for Arrow Dwa and Fidelity Advisor

0.66

Correlation Coefficient

Arrow Dwa  Fidelity Advisor

Poor diversification

The 3 months correlation between Arrow and Fidelity is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Dwa Tactical 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 Arrow Dwa 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 Arrow Dwa Tactical 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 Arrow Dwa i.e., Arrow Dwa and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Arrow Dwa and Fidelity Advisor

Assuming the 90 days horizon Arrow Dwa Tactical is expected to generate 0.51 times more return on investment than Fidelity Advisor. However, Arrow Dwa Tactical is 1.96 times less risky than Fidelity Advisor. It trades about 0.2 of its potential returns per unit of risk. Fidelity Advisor Energy is currently generating about 0.08 per unit of risk. If you would invest  922.00  in Arrow Dwa Tactical on September 3, 2024 and sell it today you would earn a total of  77.00  from holding Arrow Dwa Tactical or generate 8.35% return on investment over 90 days.

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

Arrow Dwa Tactical  vs.  Fidelity Advisor Energy

Arrow Dwa Tactical

Risk-Adjusted Performance

15 of 100

Good

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

Fidelity Advisor Energy

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Energy are ranked lower than 5 (%) 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 Arrow Dwa and Fidelity Advisor

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

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.