Correlation Between Fidelity Mega and Fidelity Advisor

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

Diversification Opportunities for Fidelity Mega and Fidelity Advisor

-0.31

Correlation Coefficient

Fidelity Mega  Fidelity Advisor

Very good diversification

The 3 months correlation between Fidelity and Fidelity is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Mega Cap and Fidelity Advisor Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Health and Fidelity Mega 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 Mega Cap 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 Health has no effect on the direction of Fidelity Mega i.e., Fidelity Mega and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Fidelity Mega and Fidelity Advisor

Assuming the 90 days horizon Fidelity Mega Cap is expected to generate 0.8 times more return on investment than Fidelity Advisor. However, Fidelity Mega Cap is 1.25 times less risky than Fidelity Advisor. It trades about 0.21 of its potential returns per unit of risk. Fidelity Advisor Health is currently generating about -0.01 per unit of risk. If you would invest  2,415  in Fidelity Mega Cap on September 2, 2024 and sell it today you would earn a total of  229.00  from holding Fidelity Mega Cap or generate 9.48% return on investment over 90 days.

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

Fidelity Mega Cap  vs.  Fidelity Advisor Health

Fidelity Mega Cap

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Mega Cap are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Fidelity Mega may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fidelity Advisor Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Advisor Health has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong 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.

Pair Trading with Fidelity Mega and Fidelity Advisor

The main advantage of trading using opposite Fidelity Mega and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Mega 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 Mega Cap and Fidelity Advisor Health 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.