Correlation Between Financial Services and Fidelity Advisor
Can any of the company-specific risk be diversified away by investing in both Financial Services 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 Financial Services and Fidelity Advisor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial Services Fund and Fidelity Advisor Sumer, you can compare the effects of market volatilities on Financial Services 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 Financial Services with a short position of Fidelity Advisor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial Services and Fidelity Advisor.
Diversification Opportunities for Financial Services and Fidelity Advisor
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Financial and Fidelity is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Financial Services Fund 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 Financial Services 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 Financial Services Fund 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 Financial Services i.e., Financial Services and Fidelity Advisor go up and down completely randomly.
Pair Corralation between Financial Services and Fidelity Advisor
Assuming the 90 days horizon Financial Services is expected to generate 1.27 times less return on investment than Fidelity Advisor. But when comparing it to its historical volatility, Financial Services Fund is 1.19 times less risky than Fidelity Advisor. It trades about 0.08 of its potential returns per unit of risk. Fidelity Advisor Sumer is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,765 in Fidelity Advisor Sumer on September 3, 2024 and sell it today you would earn a total of 1,706 from holding Fidelity Advisor Sumer or generate 61.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Financial Services Fund vs. Fidelity Advisor Sumer
Performance |
| Timeline |
| Financial Services |
| Fidelity Advisor Sumer |
Financial Services and Fidelity Advisor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial Services and Fidelity Advisor
The main advantage of trading using opposite Financial Services and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial Services 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.| Financial Services vs. Health Care Fund | Financial Services vs. Banking Fund Investor | Financial Services vs. Technology Fund Investor | Financial Services vs. Transportation Fund Investor |
| Fidelity Advisor vs. Leisure Fund Investor | Fidelity Advisor vs. Banking Fund Investor | Fidelity Advisor vs. Technology Fund Investor | Fidelity Advisor vs. Financial Services Fund |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |