Correlation Between Fidelity Advisor and Barnes

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

By analyzing existing cross correlation between Fidelity Advisor Industrials and Barnes Group, you can compare the effects of market volatilities on Fidelity Advisor and Barnes 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 Barnes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Advisor and Barnes.

Diversification Opportunities for Fidelity Advisor and Barnes

0.8

Correlation Coefficient

Fidelity Advisor  Barnes

Very poor diversification

The 3 months correlation between Fidelity and Barnes is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advisor Industrials and Barnes Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barnes Group 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 Industrials are associated (or correlated) with Barnes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barnes Group has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and Barnes go up and down completely randomly.

Pair Corralation between Fidelity Advisor and Barnes

Assuming the 90 days horizon Fidelity Advisor is expected to generate 1.49 times less return on investment than Barnes. But when comparing it to its historical volatility, Fidelity Advisor Industrials is 1.99 times less risky than Barnes. It trades about 0.23 of its potential returns per unit of risk. Barnes Group is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  3,767  in Barnes Group on September 5, 2024 and sell it today you would earn a total of  939.00  from holding Barnes Group or generate 24.93% return on investment over 90 days.

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

Fidelity Advisor Industrials  vs.  Barnes Group

Fidelity Advisor Ind

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Industrials are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Fidelity Advisor showed solid returns over the last few months and may actually be approaching a breakup point.

Barnes Group

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Barnes Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental drivers, Barnes sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fidelity Advisor and Barnes

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

The idea behind Fidelity Advisor Industrials and Barnes Group 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.