Correlation Between Fidelity Asset and Fidelity Advisor

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Can any of the company-specific risk be diversified away by investing in both Fidelity Asset 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 Asset 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 Asset Manager and Fidelity Advisor Multi Asset, you can compare the effects of market volatilities on Fidelity Asset 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 Asset with a short position of Fidelity Advisor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Asset and Fidelity Advisor.

Diversification Opportunities for Fidelity Asset and Fidelity Advisor

0.53
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Fidelity and Fidelity is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Asset Manager and Fidelity Advisor Multi Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Multi and Fidelity Asset 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 Asset Manager 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 Multi has no effect on the direction of Fidelity Asset i.e., Fidelity Asset and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Fidelity Asset and Fidelity Advisor

Assuming the 90 days horizon Fidelity Asset is expected to generate 2.73 times less return on investment than Fidelity Advisor. But when comparing it to its historical volatility, Fidelity Asset Manager is 1.55 times less risky than Fidelity Advisor. It trades about 0.13 of its potential returns per unit of risk. Fidelity Advisor Multi Asset is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  1,382  in Fidelity Advisor Multi Asset on September 6, 2024 and sell it today you would earn a total of  94.00  from holding Fidelity Advisor Multi Asset or generate 6.8% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Fidelity Asset Manager  vs.  Fidelity Advisor Multi Asset

 Performance 
       Timeline  
Fidelity Asset Manager 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Asset Manager are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fidelity Asset is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Fidelity Advisor Multi 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Multi Asset are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Fidelity Advisor may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fidelity Asset and Fidelity Advisor Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fidelity Asset and Fidelity Advisor

The main advantage of trading using opposite Fidelity Asset and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Asset 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 Asset Manager and Fidelity Advisor Multi Asset 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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