Correlation Between Financial Services and Fidelity Advisor
Can any of the company-specific risk be diversified away by investing in both Financial Services 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 Financial Services and Fidelity Advisor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial Services Portfolio and Fidelity Advisor Utilities, you can compare the effects of market volatilities on Financial Services 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 Financial Services with a short position of Fidelity Advisor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial Services and Fidelity Advisor.
Diversification Opportunities for Financial Services and Fidelity Advisor
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Financial and Fidelity is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Financial Services 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 Financial Services 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 Financial Services 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 Financial Services i.e., Financial Services and Fidelity Advisor go up and down completely randomly.
Pair Corralation between Financial Services and Fidelity Advisor
Assuming the 90 days horizon Financial Services Portfolio is expected to generate 0.65 times more return on investment than Fidelity Advisor. However, Financial Services Portfolio is 1.53 times less risky than Fidelity Advisor. It trades about -0.05 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 1,628 in Financial Services Portfolio on September 12, 2024 and sell it today you would lose (11.00) from holding Financial Services Portfolio or give up 0.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Financial Services Portfolio vs. Fidelity Advisor Utilities
Performance |
| Timeline |
| Financial Services |
| Fidelity Advisor Uti |
Financial Services and Fidelity Advisor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial Services and Fidelity Advisor
The main advantage of trading using opposite Financial Services and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial Services 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.| Financial Services vs. Vanguard Financials Index | Financial Services vs. Regional Bank Fund | Financial Services vs. Regional Bank Fund | Financial Services vs. T Rowe Price |
| Fidelity Advisor vs. Alpine Dynamic Dividend | Fidelity Advisor vs. The Gabelli Utilities | Fidelity Advisor vs. The Gabelli Equity | Fidelity Advisor vs. Hennessy Gas Utility |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |