Correlation Between Fidelity Absolute and Fidelity Advanced

Can any of the company-specific risk be diversified away by investing in both Fidelity Absolute and Fidelity Advanced 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 Fidelity Absolute and Fidelity Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fidelity Absolute Income and Fidelity Advanced Equity, you can compare the effects of market volatilities on Fidelity Absolute and Fidelity Advanced 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 Fidelity Absolute with a short position of Fidelity Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Absolute and Fidelity Advanced.

Diversification Opportunities for Fidelity Absolute and Fidelity Advanced

0.95

Correlation Coefficient

Fidelity Absolute  Fidelity Advanced

Almost no diversification

The 3 months correlation between Fidelity and Fidelity is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Absolute Income and Fidelity Advanced Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advanced Equity and Fidelity Absolute 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 Fidelity Absolute Income are associated (or correlated) with Fidelity Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Advanced Equity has no effect on the direction of Fidelity Absolute i.e., Fidelity Absolute and Fidelity Advanced go up and down completely randomly.

Pair Corralation between Fidelity Absolute and Fidelity Advanced

Assuming the 90 days trading horizon Fidelity Absolute is expected to generate 5.36 times less return on investment than Fidelity Advanced. But when comparing it to its historical volatility, Fidelity Absolute Income is 6.09 times less risky than Fidelity Advanced. It trades about 0.35 of its potential returns per unit of risk. Fidelity Advanced Equity is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  2,014  in Fidelity Advanced Equity on April 20, 2025 and sell it today you would earn a total of  434.00  from holding Fidelity Advanced Equity or generate 21.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Fidelity Absolute Income  vs.  Fidelity Advanced Equity

Fidelity Absolute Income

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Absolute Income are ranked lower than 27 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy basic indicators, Fidelity Absolute is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Fidelity Advanced Equity

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advanced Equity are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of very weak basic indicators, Fidelity Advanced displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fidelity Absolute and Fidelity Advanced

The main advantage of trading using opposite Fidelity Absolute and Fidelity Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Absolute position performs unexpectedly, Fidelity Advanced 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 Advanced will offset losses from the drop in Fidelity Advanced's long position.

The idea behind Fidelity Absolute Income and Fidelity Advanced Equity 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.