Correlation Between Consumer Staples and Fidelity Advisor
Can any of the company-specific risk be diversified away by investing in both Consumer Staples 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 Consumer Staples and Fidelity Advisor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consumer Staples Portfolio and Fidelity Advisor Health, you can compare the effects of market volatilities on Consumer Staples 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 Consumer Staples with a short position of Fidelity Advisor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consumer Staples and Fidelity Advisor.
Diversification Opportunities for Consumer Staples and Fidelity Advisor
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Consumer and Fidelity is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Consumer Staples Portfolio and Fidelity Advisor Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Health and Consumer Staples 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 Consumer Staples Portfolio 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 Health has no effect on the direction of Consumer Staples i.e., Consumer Staples and Fidelity Advisor go up and down completely randomly.
Pair Corralation between Consumer Staples and Fidelity Advisor
Assuming the 90 days horizon Consumer Staples is expected to generate 2.62 times less return on investment than Fidelity Advisor. But when comparing it to its historical volatility, Consumer Staples Portfolio is 1.18 times less risky than Fidelity Advisor. It trades about 0.01 of its potential returns per unit of risk. Fidelity Advisor Health is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 4,532 in Fidelity Advisor Health on August 29, 2024 and sell it today you would earn a total of 362.00 from holding Fidelity Advisor Health or generate 7.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consumer Staples Portfolio vs. Fidelity Advisor Health
Performance |
| Timeline |
| Consumer Staples Por |
| Fidelity Advisor Health |
Consumer Staples and Fidelity Advisor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consumer Staples and Fidelity Advisor
The main advantage of trading using opposite Consumer Staples and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consumer Staples 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.| Consumer Staples vs. Fidelity Advisor Health | Consumer Staples vs. Fidelity Advisor New | Consumer Staples vs. Fidelity Advisor Technology | Consumer Staples vs. Consumer Staples Portfolio |
| Fidelity Advisor vs. Fidelity Advisor Technology | Fidelity Advisor vs. Fidelity Advisor Biotechnology | Fidelity Advisor vs. Fidelity Advisor Financial | Fidelity Advisor vs. Fidelity Advisor Utilities |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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