Correlation Between Fidelity Advisor and Invesco Main

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

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

Diversification Opportunities for Fidelity Advisor and Invesco Main

0.57

Correlation Coefficient

Fidelity Advisor  Invesco Main

Very weak diversification

The 3 months correlation between Fidelity and Invesco is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advisor Energy and Invesco Main Street in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Main Street 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 Energy are associated (or correlated) with Invesco Main. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Main Street has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and Invesco Main go up and down completely randomly.

Pair Corralation between Fidelity Advisor and Invesco Main

Assuming the 90 days horizon Fidelity Advisor Energy is expected to generate 0.88 times more return on investment than Invesco Main. However, Fidelity Advisor Energy is 1.14 times less risky than Invesco Main. It trades about 0.05 of its potential returns per unit of risk. Invesco Main Street is currently generating about 0.03 per unit of risk. If you would invest  4,677  in Fidelity Advisor Energy on September 15, 2024 and sell it today you would earn a total of  166.00  from holding Fidelity Advisor Energy or generate 3.55% return on investment over 90 days.

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

Fidelity Advisor Energy  vs.  Invesco Main Street

Fidelity Advisor Energy

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Energy are ranked lower than 3 (%) 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.

Invesco Main Street

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Main Street are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Invesco Main 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 Invesco Main

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

The idea behind Fidelity Advisor Energy and Invesco Main Street 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.