Correlation Between Fidelity Small and Fidelity Advisor
Can any of the company-specific risk be diversified away by investing in both Fidelity Small 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 Small 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 Small Cap and Fidelity Advisor Growth, you can compare the effects of market volatilities on Fidelity Small 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 Small with a short position of Fidelity Advisor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Small and Fidelity Advisor.
Diversification Opportunities for Fidelity Small and Fidelity Advisor
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Fidelity is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Small Cap and Fidelity Advisor Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Growth and Fidelity Small 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 Small Cap 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 Growth has no effect on the direction of Fidelity Small i.e., Fidelity Small and Fidelity Advisor go up and down completely randomly.
Pair Corralation between Fidelity Small and Fidelity Advisor
Assuming the 90 days horizon Fidelity Small is expected to generate 3.35 times less return on investment than Fidelity Advisor. But when comparing it to its historical volatility, Fidelity Small Cap is 1.01 times less risky than Fidelity Advisor. It trades about 0.04 of its potential returns per unit of risk. Fidelity Advisor Growth is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 15,656 in Fidelity Advisor Growth on August 30, 2024 and sell it today you would earn a total of 1,642 from holding Fidelity Advisor Growth or generate 10.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Small Cap vs. Fidelity Advisor Growth
Performance |
| Timeline |
| Fidelity Small Cap |
| Fidelity Advisor Growth |
Fidelity Small and Fidelity Advisor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Small and Fidelity Advisor
The main advantage of trading using opposite Fidelity Small and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Small 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 Small vs. Fidelity Small Cap | Fidelity Small vs. Fidelity Focused Stock | Fidelity Small vs. Fidelity Mid Cap | Fidelity Small vs. Fidelity Large Cap |
| Fidelity Advisor vs. Short Oil Gas | Fidelity Advisor vs. Calvert Global Energy | Fidelity Advisor vs. Energy Basic Materials | Fidelity Advisor vs. Hennessy Bp Energy |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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