Correlation Between Fidelity Advisor and Prudential Jennison

Can any of the company-specific risk be diversified away by investing in both Fidelity Advisor and Prudential Jennison 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 Prudential Jennison 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 Prudential Jennison Mid Cap, you can compare the effects of market volatilities on Fidelity Advisor and Prudential Jennison 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 Prudential Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Advisor and Prudential Jennison.

Diversification Opportunities for Fidelity Advisor and Prudential Jennison

0.95

Correlation Coefficient

Fidelity Advisor  Prudential Jennison

Almost no diversification

The 3 months correlation between Fidelity and Prudential is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advisor Financial and Prudential Jennison Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison Mid 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 Prudential Jennison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Jennison Mid has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and Prudential Jennison go up and down completely randomly.

Pair Corralation between Fidelity Advisor and Prudential Jennison

Assuming the 90 days horizon Fidelity Advisor Financial is expected to under-perform the Prudential Jennison. But the mutual fund apears to be less risky and, when comparing its historical volatility, Fidelity Advisor Financial is 1.6 times less risky than Prudential Jennison. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Prudential Jennison Mid Cap is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,474  in Prudential Jennison Mid Cap on September 12, 2024 and sell it today you would earn a total of  16.00  from holding Prudential Jennison Mid Cap or generate 0.65% return on investment over 90 days.

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

Fidelity Advisor Financial  vs.  Prudential Jennison Mid Cap

Fidelity Advisor Fin

Risk-Adjusted Performance

15 of 100

Solid

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.

Prudential Jennison Mid

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Jennison Mid Cap are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Prudential Jennison showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fidelity Advisor and Prudential Jennison

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

The idea behind Fidelity Advisor Financial and Prudential Jennison Mid Cap 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 Anywhere module to track or share privately all of your investments from the convenience of any device.