Correlation Between Fidelity and Fidelity Advisor

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

Diversification Opportunities for Fidelity and Fidelity Advisor

0.64

Correlation Coefficient

Fidelity  Fidelity Advisor

Poor diversification

The 3 months correlation between Fidelity and Fidelity is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Sustainability Index and Fidelity Advisor Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Stock and Fidelity 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 Sustainability Index 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 Stock has no effect on the direction of Fidelity i.e., Fidelity and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Fidelity and Fidelity Advisor

Assuming the 90 days horizon Fidelity Sustainability Index is expected to generate 0.81 times more return on investment than Fidelity Advisor. However, Fidelity Sustainability Index is 1.24 times less risky than Fidelity Advisor. It trades about 0.12 of its potential returns per unit of risk. Fidelity Advisor Stock is currently generating about 0.02 per unit of risk. If you would invest  2,327  in Fidelity Sustainability Index on March 17, 2024 and sell it today you would earn a total of  122.00  from holding Fidelity Sustainability Index or generate 5.24% return on investment over 90 days.

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

Fidelity Sustainability Index  vs.  Fidelity Advisor Stock

Fidelity Sustainability

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Sustainability Index are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Fidelity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Advisor Stock

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Stock are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary 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 and Fidelity Advisor

The main advantage of trading using opposite Fidelity and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity 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 Sustainability Index and Fidelity Advisor Stock 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.