Correlation Between Fidelity Advisor and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Fidelity Advisor and Dow Jones 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 Advisor and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Advisor Freedom and Dow Jones Industrial, you can compare the effects of market volatilities on Fidelity Advisor and Dow Jones 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 Advisor with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Advisor and Dow Jones.
Diversification Opportunities for Fidelity Advisor and Dow Jones
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Dow is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advisor Freedom and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Fidelity Advisor 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 Advisor Freedom are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and Dow Jones go up and down completely randomly.
Pair Corralation between Fidelity Advisor and Dow Jones
Assuming the 90 days horizon Fidelity Advisor Freedom is expected to generate 1.01 times more return on investment than Dow Jones. However, Fidelity Advisor is 1.01 times more volatile than Dow Jones Industrial. It trades about 0.09 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of risk. If you would invest 1,003 in Fidelity Advisor Freedom on August 30, 2024 and sell it today you would earn a total of 349.00 from holding Fidelity Advisor Freedom or generate 34.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Advisor Freedom vs. Dow Jones Industrial
Performance |
| Timeline |
Fidelity Advisor and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Fidelity Advisor Freedom
Pair trading matchups for Fidelity Advisor
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Fidelity Advisor and Dow Jones
The main advantage of trading using opposite Fidelity Advisor and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Advisor position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Fidelity Advisor vs. The Gabelli Small | Fidelity Advisor vs. Massmutual Premier Diversified | Fidelity Advisor vs. Jhancock Diversified Macro | Fidelity Advisor vs. Guggenheim Diversified Income |
| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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