Correlation Between Energy Services and Fidelity Advisor
Can any of the company-specific risk be diversified away by investing in both Energy 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 Energy 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 Energy Services Fund and Fidelity Advisor Energy, you can compare the effects of market volatilities on Energy 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 Energy Services with a short position of Fidelity Advisor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Services and Fidelity Advisor.
Diversification Opportunities for Energy Services and Fidelity Advisor
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ENERGY and Fidelity is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Energy Services Fund and Fidelity Advisor Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Energy and Energy 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 Energy 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 Energy has no effect on the direction of Energy Services i.e., Energy Services and Fidelity Advisor go up and down completely randomly.
Pair Corralation between Energy Services and Fidelity Advisor
Assuming the 90 days horizon Energy Services is expected to generate 1.02 times less return on investment than Fidelity Advisor. In addition to that, Energy Services is 1.59 times more volatile than Fidelity Advisor Energy. It trades about 0.07 of its total potential returns per unit of risk. Fidelity Advisor Energy is currently generating about 0.12 per unit of volatility. If you would invest 4,805 in Fidelity Advisor Energy on August 29, 2024 and sell it today you would earn a total of 292.00 from holding Fidelity Advisor Energy or generate 6.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Energy Services Fund vs. Fidelity Advisor Energy
Performance |
| Timeline |
| Energy Services |
| Fidelity Advisor Energy |
Energy Services and Fidelity Advisor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Services and Fidelity Advisor
The main advantage of trading using opposite Energy Services and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy 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.| Energy Services vs. HUMANA INC | Energy Services vs. Aquagold International | Energy Services vs. Barloworld Ltd ADR | Energy Services vs. Morningstar Unconstrained Allocation |
| Fidelity Advisor vs. HUMANA INC | Fidelity Advisor vs. Aquagold International | Fidelity Advisor vs. Barloworld Ltd ADR | Fidelity Advisor vs. Morningstar Unconstrained Allocation |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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