Correlation Between KAR Auction and Fidelity Advisor
Can any of the company-specific risk be diversified away by investing in both KAR Auction 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 KAR Auction and Fidelity Advisor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KAR Auction Services and Fidelity Advisor Sumer, you can compare the effects of market volatilities on KAR Auction 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 KAR Auction with a short position of Fidelity Advisor. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAR Auction and Fidelity Advisor.
Diversification Opportunities for KAR Auction and Fidelity Advisor
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KAR and Fidelity is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding KAR Auction Services and Fidelity Advisor Sumer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Sumer and KAR Auction 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 KAR Auction Services 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 Sumer has no effect on the direction of KAR Auction i.e., KAR Auction and Fidelity Advisor go up and down completely randomly.
Pair Corralation between KAR Auction and Fidelity Advisor
Considering the 90-day investment horizon KAR Auction Services is expected to generate 2.67 times more return on investment than Fidelity Advisor. However, KAR Auction is 2.67 times more volatile than Fidelity Advisor Sumer. It trades about 0.33 of its potential returns per unit of risk. Fidelity Advisor Sumer is currently generating about 0.32 per unit of risk. If you would invest 1,606 in KAR Auction Services on August 25, 2024 and sell it today you would earn a total of 388.00 from holding KAR Auction Services or generate 24.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
KAR Auction Services vs. Fidelity Advisor Sumer
Performance |
| Timeline |
| KAR Auction Services |
| Fidelity Advisor Sumer |
KAR Auction and Fidelity Advisor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KAR Auction and Fidelity Advisor
The main advantage of trading using opposite KAR Auction and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KAR Auction 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.| KAR Auction vs. CarGurus | KAR Auction vs. Kingsway Financial Services | KAR Auction vs. Driven Brands Holdings | KAR Auction vs. Group 1 Automotive |
| Fidelity Advisor vs. Ab Centrated Growth | Fidelity Advisor vs. Champlain Mid Cap | Fidelity Advisor vs. Franklin Growth Opportunities | Fidelity Advisor vs. Growth Fund Of |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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