Correlation Between Fidelity Global and Fidelity Advantage

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

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

Diversification Opportunities for Fidelity Global and Fidelity Advantage

-0.98

Correlation Coefficient

Fidelity Global  Fidelity Advantage

Pay attention - limited upside

The 3 months correlation between Fidelity and Fidelity is -0.98. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Global Value and Fidelity Advantage Bitcoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advantage and Fidelity Global 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 Global Value are associated (or correlated) with Fidelity Advantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Advantage has no effect on the direction of Fidelity Global i.e., Fidelity Global and Fidelity Advantage go up and down completely randomly.

Pair Corralation between Fidelity Global and Fidelity Advantage

Assuming the 90 days trading horizon Fidelity Global Value is expected to under-perform the Fidelity Advantage. But the etf apears to be less risky and, when comparing its historical volatility, Fidelity Global Value is 2.71 times less risky than Fidelity Advantage. The etf trades about -0.22 of its potential returns per unit of risk. The Fidelity Advantage Bitcoin is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  2,609  in Fidelity Advantage Bitcoin on September 3, 2024 and sell it today you would earn a total of  1,908  from holding Fidelity Advantage Bitcoin or generate 73.13% return on investment over 90 days.

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

Fidelity Global Value  vs.  Fidelity Advantage Bitcoin

Fidelity Global Value

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Global Value has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Etf's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Fidelity Advantage

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advantage Bitcoin are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Fidelity Advantage displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fidelity Global and Fidelity Advantage

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

The idea behind Fidelity Global Value and Fidelity Advantage Bitcoin 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.