Correlation Between World Energy and Fidelity Advisor
Can any of the company-specific risk be diversified away by investing in both World Energy 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 World Energy and Fidelity Advisor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between World Energy Fund and Fidelity Advisor Energy, you can compare the effects of market volatilities on World Energy 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 World Energy with a short position of Fidelity Advisor. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Energy and Fidelity Advisor.
Diversification Opportunities for World Energy and Fidelity Advisor
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between World and Fidelity is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding World Energy Fund and Fidelity Advisor Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Energy and World Energy 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 World Energy 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 Energy has no effect on the direction of World Energy i.e., World Energy and Fidelity Advisor go up and down completely randomly.
Pair Corralation between World Energy and Fidelity Advisor
Assuming the 90 days horizon World Energy Fund is expected to generate 1.13 times more return on investment than Fidelity Advisor. However, World Energy is 1.13 times more volatile than Fidelity Advisor Energy. It trades about 0.11 of its potential returns per unit of risk. Fidelity Advisor Energy is currently generating about -0.02 per unit of risk. If you would invest 1,471 in World Energy Fund on October 11, 2024 and sell it today you would earn a total of 38.00 from holding World Energy Fund or generate 2.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
World Energy Fund vs. Fidelity Advisor Energy
Performance |
| Timeline |
| World Energy |
| Fidelity Advisor Energy |
World Energy and Fidelity Advisor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with World Energy and Fidelity Advisor
The main advantage of trading using opposite World Energy and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Energy 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.| World Energy vs. Angel Oak Financial | World Energy vs. Blackrock Financial Institutions | World Energy vs. 1919 Financial Services | World Energy vs. Putnam Global Financials |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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