Correlation Between Thrivent Natural and Fidelity Advisor
Can any of the company-specific risk be diversified away by investing in both Thrivent Natural 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 Thrivent Natural and Fidelity Advisor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thrivent Natural Resources and Fidelity Advisor Energy, you can compare the effects of market volatilities on Thrivent Natural 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 Thrivent Natural with a short position of Fidelity Advisor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thrivent Natural and Fidelity Advisor.
Diversification Opportunities for Thrivent Natural and Fidelity Advisor
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Thrivent and Fidelity is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent Natural Resources 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 Thrivent Natural 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 Thrivent Natural Resources 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 Thrivent Natural i.e., Thrivent Natural and Fidelity Advisor go up and down completely randomly.
Pair Corralation between Thrivent Natural and Fidelity Advisor
Assuming the 90 days horizon Thrivent Natural is expected to generate 1.73 times less return on investment than Fidelity Advisor. But when comparing it to its historical volatility, Thrivent Natural Resources is 14.0 times less risky than Fidelity Advisor. It trades about 0.25 of its potential returns per unit of risk. Fidelity Advisor Energy is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 4,518 in Fidelity Advisor Energy on September 12, 2024 and sell it today you would earn a total of 336.00 from holding Fidelity Advisor Energy or generate 7.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thrivent Natural Resources vs. Fidelity Advisor Energy
Performance |
| Timeline |
| Thrivent Natural Res |
| Fidelity Advisor Energy |
Thrivent Natural and Fidelity Advisor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thrivent Natural and Fidelity Advisor
The main advantage of trading using opposite Thrivent Natural and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thrivent Natural 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.| Thrivent Natural vs. Vanguard Total Stock | Thrivent Natural vs. Vanguard 500 Index | Thrivent Natural vs. Vanguard Total Stock | Thrivent Natural vs. Vanguard Total Stock |
| Fidelity Advisor vs. Vanguard Energy Fund | Fidelity Advisor vs. Vanguard Energy Index | Fidelity Advisor vs. Fidelity Select Portfolios | Fidelity Advisor vs. Fidelity Advisor Energy |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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