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 Utilities, 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
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Consumer and Fidelity is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Consumer Staples Portfolio and Fidelity Advisor Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Uti 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 Uti 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 Portfolio is expected to generate 0.61 times more return on investment than Fidelity Advisor. However, Consumer Staples Portfolio is 1.65 times less risky than Fidelity Advisor. It trades about 0.23 of its potential returns per unit of risk. Fidelity Advisor Utilities is currently generating about -0.06 per unit of risk. If you would invest 9,637 in Consumer Staples Portfolio on September 12, 2024 and sell it today you would earn a total of 280.00 from holding Consumer Staples Portfolio or generate 2.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Consumer Staples Portfolio vs. Fidelity Advisor Utilities
Performance |
| Timeline |
| Consumer Staples Por |
| Fidelity Advisor Uti |
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.The idea behind Consumer Staples Portfolio and Fidelity Advisor Utilities 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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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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