Correlation Between Fidelity Advisor and Fidelity Diversified

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

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

Diversification Opportunities for Fidelity Advisor and Fidelity Diversified

-0.37

Correlation Coefficient

Fidelity Advisor  Fidelity Diversified

Very good diversification

The 3 months correlation between Fidelity and Fidelity is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advisor Sumer and Fidelity Diversified Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Diversified and Fidelity Advisor 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 Fidelity Advisor Sumer are associated (or correlated) with Fidelity Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Diversified has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and Fidelity Diversified go up and down completely randomly.

Pair Corralation between Fidelity Advisor and Fidelity Diversified

Assuming the 90 days horizon Fidelity Advisor Sumer is expected to generate 1.25 times more return on investment than Fidelity Diversified. However, Fidelity Advisor is 1.25 times more volatile than Fidelity Diversified International. It trades about 0.24 of its potential returns per unit of risk. Fidelity Diversified International is currently generating about -0.02 per unit of risk. If you would invest  3,811  in Fidelity Advisor Sumer on September 2, 2024 and sell it today you would earn a total of  660.00  from holding Fidelity Advisor Sumer or generate 17.32% return on investment over 90 days.

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

Fidelity Advisor Sumer  vs.  Fidelity Diversified Internati

Fidelity Advisor Sumer

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Sumer are ranked lower than 18 (%) 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.

Fidelity Diversified

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Diversified International has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Fidelity Diversified is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fidelity Advisor and Fidelity Diversified

The main advantage of trading using opposite Fidelity Advisor and Fidelity Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Advisor position performs unexpectedly, Fidelity Diversified 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 Diversified will offset losses from the drop in Fidelity Diversified's long position.

The idea behind Fidelity Advisor Sumer and Fidelity Diversified International 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.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.