Correlation Between Fidelity Mid-cap and Fidelity Advisor

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

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

Diversification Opportunities for Fidelity Mid-cap and Fidelity Advisor

0.99

Correlation Coefficient

Fidelity Mid-cap  Fidelity Advisor

No risk reduction

The 3 months correlation between Fidelity and Fidelity is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Mid Cap Stock and Fidelity Advisor Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Value and Fidelity Mid-cap 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 Mid Cap Stock are associated (or correlated) with Fidelity Advisor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Advisor Value has no effect on the direction of Fidelity Mid-cap i.e., Fidelity Mid-cap and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Fidelity Mid-cap and Fidelity Advisor

Assuming the 90 days horizon Fidelity Mid Cap Stock is expected to generate 0.83 times more return on investment than Fidelity Advisor. However, Fidelity Mid Cap Stock is 1.21 times less risky than Fidelity Advisor. It trades about 0.23 of its potential returns per unit of risk. Fidelity Advisor Value is currently generating about 0.17 per unit of risk. If you would invest  4,180  in Fidelity Mid Cap Stock on September 4, 2024 and sell it today you would earn a total of  502.00  from holding Fidelity Mid Cap Stock or generate 12.01% return on investment over 90 days.

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

Fidelity Mid Cap Stock  vs.  Fidelity Advisor Value

Fidelity Mid Cap

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Mid Cap Stock are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Fidelity Mid-cap may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fidelity Advisor Value

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Value are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Fidelity Advisor may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Fidelity Mid-cap and Fidelity Advisor

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

The idea behind Fidelity Mid Cap Stock and Fidelity Advisor Value 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.