Correlation Between Fidelity Advisor and Fidelity Pacific

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

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

Diversification Opportunities for Fidelity Advisor and Fidelity Pacific

0.89

Correlation Coefficient

Fidelity Advisor  Fidelity Pacific

Very poor diversification

The 3 months correlation between Fidelity and Fidelity is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advisor Emerging and Fidelity Pacific Basin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Pacific Basin 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 Emerging are associated (or correlated) with Fidelity Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Pacific Basin has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and Fidelity Pacific go up and down completely randomly.

Pair Corralation between Fidelity Advisor and Fidelity Pacific

Assuming the 90 days horizon Fidelity Advisor Emerging is expected to generate 0.45 times more return on investment than Fidelity Pacific. However, Fidelity Advisor Emerging is 2.24 times less risky than Fidelity Pacific. It trades about -0.03 of its potential returns per unit of risk. Fidelity Pacific Basin is currently generating about -0.15 per unit of risk. If you would invest  3,887  in Fidelity Advisor Emerging on September 27, 2024 and sell it today you would lose (20.00) from holding Fidelity Advisor Emerging or give up 0.51% of portfolio value over 90 days.

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

Fidelity Advisor Emerging  vs.  Fidelity Pacific Basin

Fidelity Advisor Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

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

Fidelity Pacific Basin

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Pacific Basin has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Fidelity Advisor and Fidelity Pacific

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

The idea behind Fidelity Advisor Emerging and Fidelity Pacific Basin 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.