Correlation Between New Economy and Fidelity Advisor
Can any of the company-specific risk be diversified away by investing in both New Economy 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 New Economy and Fidelity Advisor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Economy Fund and Fidelity Advisor New, you can compare the effects of market volatilities on New Economy 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 New Economy with a short position of Fidelity Advisor. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Economy and Fidelity Advisor.
Diversification Opportunities for New Economy and Fidelity Advisor
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between New and Fidelity is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding New Economy Fund and Fidelity Advisor New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor New and New Economy 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 New Economy Fund 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 New has no effect on the direction of New Economy i.e., New Economy and Fidelity Advisor go up and down completely randomly.
Pair Corralation between New Economy and Fidelity Advisor
Assuming the 90 days horizon New Economy is expected to generate 4.01 times less return on investment than Fidelity Advisor. In addition to that, New Economy is 1.07 times more volatile than Fidelity Advisor New. It trades about 0.02 of its total potential returns per unit of risk. Fidelity Advisor New is currently generating about 0.09 per unit of volatility. If you would invest 2,619 in Fidelity Advisor New on January 20, 2024 and sell it today you would earn a total of 81.00 from holding Fidelity Advisor New or generate 3.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Economy Fund vs. Fidelity Advisor New
Performance |
| Timeline |
| New Economy Fund |
| Fidelity Advisor New |
New Economy and Fidelity Advisor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Economy and Fidelity Advisor
The main advantage of trading using opposite New Economy and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Economy 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.| New Economy vs. New World Fund | New Economy vs. American Mutual Fund | New Economy vs. American Mutual Fund | New Economy vs. American Funds Income |
| Fidelity Advisor vs. Fidelity Advisor International | Fidelity Advisor vs. Lord Abbett Growth | Fidelity Advisor vs. Delaware Smid Cap |
Check out your portfolio center.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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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