Correlation Between Fidelity Advisor and Nationwide Investor

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

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

Diversification Opportunities for Fidelity Advisor and Nationwide Investor

0.83

Correlation Coefficient

Fidelity Advisor  Nationwide Investor

Very poor diversification

The 3 months correlation between Fidelity and Nationwide is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advisor Financial and Nationwide Investor Destinatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Investor 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 Financial are associated (or correlated) with Nationwide Investor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Investor has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and Nationwide Investor go up and down completely randomly.

Pair Corralation between Fidelity Advisor and Nationwide Investor

Assuming the 90 days horizon Fidelity Advisor Financial is expected to generate 2.44 times more return on investment than Nationwide Investor. However, Fidelity Advisor is 2.44 times more volatile than Nationwide Investor Destinations. It trades about 0.2 of its potential returns per unit of risk. Nationwide Investor Destinations is currently generating about 0.17 per unit of risk. If you would invest  3,435  in Fidelity Advisor Financial on September 3, 2024 and sell it today you would earn a total of  606.00  from holding Fidelity Advisor Financial or generate 17.64% return on investment over 90 days.

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

Fidelity Advisor Financial  vs.  Nationwide Investor Destinatio

Fidelity Advisor Fin

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Financial are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental drivers, Fidelity Advisor showed solid returns over the last few months and may actually be approaching a breakup point.

Nationwide Investor

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nationwide Investor Destinations are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Nationwide Investor 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 Nationwide Investor

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

The idea behind Fidelity Advisor Financial and Nationwide Investor Destinations 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.