Correlation Between Multisector Bond and Fidelity Advisor

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Can any of the company-specific risk be diversified away by investing in both Multisector Bond 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 Multisector Bond and Fidelity Advisor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multisector Bond Sma and Fidelity Advisor Semiconductors, you can compare the effects of market volatilities on Multisector Bond 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 Multisector Bond with a short position of Fidelity Advisor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multisector Bond and Fidelity Advisor.

Diversification Opportunities for Multisector Bond and Fidelity Advisor

MultisectorFidelityDiversified AwayMultisectorFidelityDiversified Away100%
0.13
  Correlation Coefficient

Average diversification

The 3 months correlation between Multisector and Fidelity is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Multisector Bond Sma and Fidelity Advisor Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Sem and Multisector Bond 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 Multisector Bond Sma 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 Sem has no effect on the direction of Multisector Bond i.e., Multisector Bond and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Multisector Bond and Fidelity Advisor

Assuming the 90 days horizon Multisector Bond is expected to generate 1.33 times less return on investment than Fidelity Advisor. But when comparing it to its historical volatility, Multisector Bond Sma is 8.31 times less risky than Fidelity Advisor. It trades about 0.16 of its potential returns per unit of risk. Fidelity Advisor Semiconductors is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  6,100  in Fidelity Advisor Semiconductors on November 24, 2024 and sell it today you would earn a total of  427.00  from holding Fidelity Advisor Semiconductors or generate 7.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Multisector Bond Sma  vs.  Fidelity Advisor Semiconductor

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -50510
JavaScript chart by amCharts 3.21.15MBSAX FELCX
       Timeline  
Multisector Bond Sma 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Multisector Bond Sma are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Multisector Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb13.413.4513.513.5513.613.6513.7
Fidelity Advisor Sem 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Fidelity Advisor Semiconductors has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Fidelity Advisor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb62646668707274

Multisector Bond and Fidelity Advisor Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-0.78-0.53-0.28-0.07890.0034310.08560.30.550.81.05 12345
JavaScript chart by amCharts 3.21.15MBSAX FELCX
       Returns  

Pair Trading with Multisector Bond and Fidelity Advisor

The main advantage of trading using opposite Multisector Bond and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multisector Bond 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.
The idea behind Multisector Bond Sma and Fidelity Advisor Semiconductors 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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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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