Correlation Between Fidelity Advisor and American Beacon
Can any of the company-specific risk be diversified away by investing in both Fidelity Advisor and American Beacon 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 Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Advisor Energy and American Beacon Small, you can compare the effects of market volatilities on Fidelity Advisor and American Beacon 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 Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Advisor and American Beacon.
Diversification Opportunities for Fidelity Advisor and American Beacon
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and American is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advisor Energy and American Beacon Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Small 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 Energy are associated (or correlated) with American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Small has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and American Beacon go up and down completely randomly.
Pair Corralation between Fidelity Advisor and American Beacon
Assuming the 90 days horizon Fidelity Advisor is expected to generate 1.29 times less return on investment than American Beacon. But when comparing it to its historical volatility, Fidelity Advisor Energy is 1.41 times less risky than American Beacon. It trades about 0.22 of its potential returns per unit of risk. American Beacon Small is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 2,503 in American Beacon Small on August 29, 2024 and sell it today you would earn a total of 187.00 from holding American Beacon Small or generate 7.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Advisor Energy vs. American Beacon Small
Performance |
| Timeline |
| Fidelity Advisor Energy |
| American Beacon Small |
Fidelity Advisor and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Advisor and American Beacon
The main advantage of trading using opposite Fidelity Advisor and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Advisor position performs unexpectedly, American Beacon 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 Beacon will offset losses from the drop in American Beacon's long position.| Fidelity Advisor vs. HUMANA INC | Fidelity Advisor vs. Aquagold International | Fidelity Advisor vs. Barloworld Ltd ADR | Fidelity Advisor vs. Morningstar Unconstrained Allocation |
| American Beacon vs. American Funds 2015 | American Beacon vs. American Mutual Fund | American Beacon vs. American Funds Income | American Beacon vs. American Funds Preservation |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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