Correlation Between Dow Jones and Fidelity Advisor
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and Fidelity Advisor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Fidelity Advisor Freedom, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of Fidelity Advisor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Fidelity Advisor.
Diversification Opportunities for Dow Jones and Fidelity Advisor
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and Fidelity is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Fidelity Advisor Freedom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Freedom and Dow Jones 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 Dow Jones Industrial 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 Freedom has no effect on the direction of Dow Jones i.e., Dow Jones and Fidelity Advisor go up and down completely randomly.
Pair Corralation between Dow Jones and Fidelity Advisor
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 2.27 times more return on investment than Fidelity Advisor. However, Dow Jones is 2.27 times more volatile than Fidelity Advisor Freedom. It trades about 0.08 of its potential returns per unit of risk. Fidelity Advisor Freedom is currently generating about 0.07 per unit of risk. If you would invest 3,394,710 in Dow Jones Industrial on August 24, 2024 and sell it today you would earn a total of 1,034,941 from holding Dow Jones Industrial or generate 30.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Fidelity Advisor Freedom
Performance |
| Timeline |
Dow Jones and Fidelity Advisor Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Fidelity Advisor Freedom
Pair trading matchups for Fidelity Advisor
Pair Trading with Dow Jones and Fidelity Advisor
The main advantage of trading using opposite Dow Jones and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Titan Machinery | Dow Jones vs. Simon Property Group |
| Fidelity Advisor vs. Victory High Income | Fidelity Advisor vs. California Bond Fund | Fidelity Advisor vs. Maryland Tax Free Bond | Fidelity Advisor vs. Rbc Bluebay Global |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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