Correlation Between Fidelity Advisor and Kensington Active
Can any of the company-specific risk be diversified away by investing in both Fidelity Advisor and Kensington Active 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 Kensington Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Advisor Technology and Kensington Active Advantage, you can compare the effects of market volatilities on Fidelity Advisor and Kensington Active 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 Kensington Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Advisor and Kensington Active.
Diversification Opportunities for Fidelity Advisor and Kensington Active
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Kensington is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advisor Technology and Kensington Active Advantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kensington Active 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 Technology are associated (or correlated) with Kensington Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kensington Active has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and Kensington Active go up and down completely randomly.
Pair Corralation between Fidelity Advisor and Kensington Active
Assuming the 90 days horizon Fidelity Advisor Technology is expected to generate 2.69 times more return on investment than Kensington Active. However, Fidelity Advisor is 2.69 times more volatile than Kensington Active Advantage. It trades about 0.26 of its potential returns per unit of risk. Kensington Active Advantage is currently generating about 0.36 per unit of risk. If you would invest 13,701 in Fidelity Advisor Technology on September 2, 2024 and sell it today you would earn a total of 855.00 from holding Fidelity Advisor Technology or generate 6.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Advisor Technology vs. Kensington Active Advantage
Performance |
| Timeline |
| Fidelity Advisor Tec |
| Kensington Active |
Fidelity Advisor and Kensington Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Advisor and Kensington Active
The main advantage of trading using opposite Fidelity Advisor and Kensington Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Advisor position performs unexpectedly, Kensington Active 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 Kensington Active will offset losses from the drop in Kensington Active's long position.| Fidelity Advisor vs. Fidelity Advisor Health | Fidelity Advisor vs. Fidelity Advisor Financial | Fidelity Advisor vs. Fidelity Advisor Utilities | Fidelity Advisor vs. Fidelity Advisor Small |
| Kensington Active vs. Kensington Defender Institutional | Kensington Active vs. Kensington Active Advantage | Kensington Active vs. Kensington Dynamic Growth | Kensington Active vs. Kensington Dynamic Growth |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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