Correlation Between Fidelity Advisor and Fidelity Total

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

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

Diversification Opportunities for Fidelity Advisor and Fidelity Total

0.99

Correlation Coefficient

Fidelity Advisor  Fidelity Total

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 Advisor Mortgage and Fidelity Total Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Total Bond 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 Mortgage are associated (or correlated) with Fidelity Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Total Bond has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and Fidelity Total go up and down completely randomly.

Pair Corralation between Fidelity Advisor and Fidelity Total

Assuming the 90 days horizon Fidelity Advisor Mortgage is expected to under-perform the Fidelity Total. In addition to that, Fidelity Advisor is 1.15 times more volatile than Fidelity Total Bond. It trades about -0.17 of its total potential returns per unit of risk. Fidelity Total Bond is currently generating about -0.15 per unit of volatility. If you would invest  978.00  in Fidelity Total Bond on September 17, 2024 and sell it today you would lose (27.00) from holding Fidelity Total Bond or give up 2.76% of portfolio value over 90 days.

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

Fidelity Advisor Mortgage  vs.  Fidelity Total Bond

Fidelity Advisor Mortgage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Advisor Mortgage has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Fidelity Advisor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Total Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Total Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Fidelity Total 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 Fidelity Total

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

The idea behind Fidelity Advisor Mortgage and Fidelity Total Bond 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.