Correlation Between Fidelity Salem and Fidelity Advisor
Can any of the company-specific risk be diversified away by investing in both Fidelity Salem 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 Fidelity Salem and Fidelity Advisor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Salem Street and Fidelity Advisor Diversified, you can compare the effects of market volatilities on Fidelity Salem 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 Fidelity Salem with a short position of Fidelity Advisor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Salem and Fidelity Advisor.
Diversification Opportunities for Fidelity Salem and Fidelity Advisor
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Fidelity is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Salem Street and Fidelity Advisor Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Div and Fidelity Salem 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 Salem Street 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 Div has no effect on the direction of Fidelity Salem i.e., Fidelity Salem and Fidelity Advisor go up and down completely randomly.
Pair Corralation between Fidelity Salem and Fidelity Advisor
Assuming the 90 days horizon Fidelity Salem Street is expected to under-perform the Fidelity Advisor. In addition to that, Fidelity Salem is 1.1 times more volatile than Fidelity Advisor Diversified. It trades about -0.31 of its total potential returns per unit of risk. Fidelity Advisor Diversified is currently generating about -0.16 per unit of volatility. If you would invest 2,718 in Fidelity Advisor Diversified on August 27, 2024 and sell it today you would lose (70.00) from holding Fidelity Advisor Diversified or give up 2.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Salem Street vs. Fidelity Advisor Diversified
Performance |
| Timeline |
| Fidelity Salem Street |
| Fidelity Advisor Div |
Fidelity Salem and Fidelity Advisor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Salem and Fidelity Advisor
The main advantage of trading using opposite Fidelity Salem and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Salem 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.| Fidelity Salem vs. Fidelity Total International | Fidelity Salem vs. Fidelity Mega Cap | Fidelity Salem vs. Fidelity International Value |
| Fidelity Advisor vs. Fidelity Total International | Fidelity Advisor vs. Fidelity Mega Cap | Fidelity Advisor vs. Fidelity International Value |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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