Correlation Between Value Fund and Fidelity Advisor

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

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

Diversification Opportunities for Value Fund and Fidelity Advisor

0.63

Correlation Coefficient

Value Fund  Fidelity Advisor

Poor diversification

The 3 months correlation between Value and Fidelity is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Value Fund Investor and Fidelity Advisor Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Balanced and Value Fund 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 Value Fund Investor 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 Balanced has no effect on the direction of Value Fund i.e., Value Fund and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Value Fund and Fidelity Advisor

Assuming the 90 days horizon Value Fund Investor is expected to generate 2.08 times more return on investment than Fidelity Advisor. However, Value Fund is 2.08 times more volatile than Fidelity Advisor Balanced. It trades about 0.1 of its potential returns per unit of risk. Fidelity Advisor Balanced is currently generating about 0.08 per unit of risk. If you would invest  840.00  in Value Fund Investor on September 13, 2024 and sell it today you would earn a total of  29.00  from holding Value Fund Investor or generate 3.45% return on investment over 90 days.

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

Value Fund Investor  vs.  Fidelity Advisor Balanced

Value Fund Investor

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Value Fund Investor are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Value Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Advisor Balanced

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Balanced are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic 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 Value Fund and Fidelity Advisor

The main advantage of trading using opposite Value Fund and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Value Fund 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 Value Fund Investor and Fidelity Advisor Balanced 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.