Correlation Between Fidelity Advisor and Wells Fargo

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Can any of the company-specific risk be diversified away by investing in both Fidelity Advisor and Wells Fargo 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 Advisor and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Advisor Sumer and Wells Fargo, you can compare the effects of market volatilities on Fidelity Advisor and Wells Fargo 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 Advisor with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Advisor and Wells Fargo.

Diversification Opportunities for Fidelity Advisor and Wells Fargo

0.85
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Fidelity and Wells is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding FIDELITY ADVISOR SUMER and Wells Fargo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo and Fidelity Advisor 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 Advisor Sumer are associated (or correlated) with Wells Fargo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wells Fargo has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and Wells Fargo go up and down completely randomly.

Pair Corralation between Fidelity Advisor and Wells Fargo

Assuming the 90 days horizon Fidelity Advisor is expected to generate 2.29 times less return on investment than Wells Fargo. But when comparing it to its historical volatility, Fidelity Advisor Sumer is 1.11 times less risky than Wells Fargo. It trades about 0.14 of its potential returns per unit of risk. Wells Fargo is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  5,481  in Wells Fargo on December 29, 2023 and sell it today you would earn a total of  315.00  from holding Wells Fargo or generate 5.75% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

FIDELITY ADVISOR SUMER  vs.  Wells Fargo

 Performance 
       Timeline  
Fidelity Advisor Sumer 

Risk-Adjusted Performance

9 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Sumer are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly uncertain basic indicators, Fidelity Advisor may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Wells Fargo 

Risk-Adjusted Performance

15 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Wells Fargo are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, Wells Fargo exhibited solid returns over the last few months and may actually be approaching a breakup point.

Fidelity Advisor and Wells Fargo Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fidelity Advisor and Wells Fargo

The main advantage of trading using opposite Fidelity Advisor and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Advisor position performs unexpectedly, Wells Fargo 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 Wells Fargo will offset losses from the drop in Wells Fargo's long position.
The idea behind Fidelity Advisor Sumer and Wells Fargo 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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