Correlation Between Fidelity Core and Fidelity Advantage

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

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

Diversification Opportunities for Fidelity Core and Fidelity Advantage

0.3

Correlation Coefficient

Fidelity Core  Fidelity Advantage

Weak diversification

The 3 months correlation between Fidelity and Fidelity is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Core Bond and Fidelity Advantage Bitcoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advantage and Fidelity Core 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 Core Bond are associated (or correlated) with Fidelity Advantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Advantage has no effect on the direction of Fidelity Core i.e., Fidelity Core and Fidelity Advantage go up and down completely randomly.

Pair Corralation between Fidelity Core and Fidelity Advantage

Assuming the 90 days trading horizon Fidelity Core is expected to generate 45.45 times less return on investment than Fidelity Advantage. But when comparing it to its historical volatility, Fidelity Core Bond is 7.25 times less risky than Fidelity Advantage. It trades about 0.04 of its potential returns per unit of risk. Fidelity Advantage Bitcoin is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  3,989  in Fidelity Advantage Bitcoin on April 20, 2025 and sell it today you would earn a total of  1,326  from holding Fidelity Advantage Bitcoin or generate 33.24% return on investment over 90 days.

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

Fidelity Core Bond  vs.  Fidelity Advantage Bitcoin

Fidelity Core Bond

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Core Bond are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Fidelity Core is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Fidelity Advantage

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advantage Bitcoin are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Fidelity Advantage displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fidelity Core and Fidelity Advantage

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

The idea behind Fidelity Core Bond and Fidelity Advantage Bitcoin 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.

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 Transaction History module to view history of all your transactions and understand their impact on performance.