Correlation Between BetaPro SP and Fidelity Advantage

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

By analyzing existing cross correlation between BetaPro SP 500 and Fidelity Advantage Ether, you can compare the effects of market volatilities on BetaPro SP and Fidelity Advantage 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 BetaPro SP with a short position of Fidelity Advantage. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro SP and Fidelity Advantage.

Diversification Opportunities for BetaPro SP and Fidelity Advantage

-0.84

Correlation Coefficient

BetaPro SP  Fidelity Advantage

Pay attention - limited upside

The 3 months correlation between BetaPro and Fidelity is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro SP 500 and Fidelity Advantage Ether in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advantage Ether and BetaPro SP 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 BetaPro SP 500 are associated (or correlated) with Fidelity Advantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Advantage Ether has no effect on the direction of BetaPro SP i.e., BetaPro SP and Fidelity Advantage go up and down completely randomly.

Pair Corralation between BetaPro SP and Fidelity Advantage

Assuming the 90 days trading horizon BetaPro SP 500 is expected to under-perform the Fidelity Advantage. But the etf apears to be less risky and, when comparing its historical volatility, BetaPro SP 500 is 1.3 times less risky than Fidelity Advantage. The etf trades about -0.06 of its potential returns per unit of risk. The Fidelity Advantage Ether is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  4,162  in Fidelity Advantage Ether on September 14, 2024 and sell it today you would earn a total of  3,246  from holding Fidelity Advantage Ether or generate 77.99% return on investment over 90 days.

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

BetaPro SP 500  vs.  Fidelity Advantage Ether

BetaPro SP 500

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BetaPro SP 500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Fidelity Advantage Ether

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advantage Ether are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Fidelity Advantage displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BetaPro SP and Fidelity Advantage

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

The idea behind BetaPro SP 500 and Fidelity Advantage Ether 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.