Correlation Between Fidelity Advisor and American Balanced
Can any of the company-specific risk be diversified away by investing in both Fidelity Advisor and American Balanced 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 American Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Advisor Diversified and American Balanced Fund, you can compare the effects of market volatilities on Fidelity Advisor and American Balanced 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 American Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Advisor and American Balanced.
Diversification Opportunities for Fidelity Advisor and American Balanced
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FIDELITY and American is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advisor Diversified and American Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Balanced 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 Diversified are associated (or correlated) with American Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Balanced has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and American Balanced go up and down completely randomly.
Pair Corralation between Fidelity Advisor and American Balanced
Assuming the 90 days horizon Fidelity Advisor Diversified is expected to generate 1.75 times more return on investment than American Balanced. However, Fidelity Advisor is 1.75 times more volatile than American Balanced Fund. It trades about 0.14 of its potential returns per unit of risk. American Balanced Fund is currently generating about 0.14 per unit of risk. If you would invest 2,952 in Fidelity Advisor Diversified on September 4, 2024 and sell it today you would earn a total of 1,046 from holding Fidelity Advisor Diversified or generate 35.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
Fidelity Advisor Diversified vs. American Balanced Fund
Performance |
| Timeline |
| Fidelity Advisor Div |
| American Balanced |
Fidelity Advisor and American Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Advisor and American Balanced
The main advantage of trading using opposite Fidelity Advisor and American Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Advisor position performs unexpectedly, American Balanced 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 American Balanced will offset losses from the drop in American Balanced's long position.| Fidelity Advisor vs. Davenport Small Cap | Fidelity Advisor vs. Northern Small Cap | Fidelity Advisor vs. Lord Abbett Diversified | Fidelity Advisor vs. Blackrock Sm Cap |
| American Balanced vs. Income Fund Of | American Balanced vs. New World Fund | American Balanced vs. American Mutual Fund | American Balanced vs. American Mutual Fund |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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