Correlation Between Fidelity Advisor and Icon Information
Can any of the company-specific risk be diversified away by investing in both Fidelity Advisor and Icon Information 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 Icon Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Advisor Utilities and Icon Information Technology, you can compare the effects of market volatilities on Fidelity Advisor and Icon Information 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 Icon Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Advisor and Icon Information.
Diversification Opportunities for Fidelity Advisor and Icon Information
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FIDELITY and Icon is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advisor Utilities and Icon Information Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Information Tec 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 Utilities are associated (or correlated) with Icon Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Information Tec has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and Icon Information go up and down completely randomly.
Pair Corralation between Fidelity Advisor and Icon Information
Assuming the 90 days horizon Fidelity Advisor Utilities is expected to generate 0.56 times more return on investment than Icon Information. However, Fidelity Advisor Utilities is 1.78 times less risky than Icon Information. It trades about 0.42 of its potential returns per unit of risk. Icon Information Technology is currently generating about -0.06 per unit of risk. If you would invest 4,548 in Fidelity Advisor Utilities on September 2, 2024 and sell it today you would earn a total of 386.00 from holding Fidelity Advisor Utilities or generate 8.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Advisor Utilities vs. Icon Information Technology
Performance |
| Timeline |
| Fidelity Advisor Uti |
| Icon Information Tec |
Fidelity Advisor and Icon Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Advisor and Icon Information
The main advantage of trading using opposite Fidelity Advisor and Icon Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Advisor position performs unexpectedly, Icon Information 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 Icon Information will offset losses from the drop in Icon Information's long position.The idea behind Fidelity Advisor Utilities and Icon Information Technology pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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