Correlation Between Fidelity Advisor and State Farm

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

By analyzing existing cross correlation between Fidelity Advisor Gold and State Farm Growth, you can compare the effects of market volatilities on Fidelity Advisor and State Farm 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 State Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Advisor and State Farm.

Diversification Opportunities for Fidelity Advisor and State Farm

0.4

Correlation Coefficient

Fidelity Advisor  State Farm

Very weak diversification

The 3 months correlation between Fidelity and State is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advisor Gold and State Farm Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Farm Growth 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 Gold are associated (or correlated) with State Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Farm Growth has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and State Farm go up and down completely randomly.

Pair Corralation between Fidelity Advisor and State Farm

Assuming the 90 days horizon Fidelity Advisor is expected to generate 1.01 times less return on investment than State Farm. In addition to that, Fidelity Advisor is 2.92 times more volatile than State Farm Growth. It trades about 0.1 of its total potential returns per unit of risk. State Farm Growth is currently generating about 0.31 per unit of volatility. If you would invest  11,287  in State Farm Growth on February 28, 2024 and sell it today you would earn a total of  469.00  from holding State Farm Growth or generate 4.16% return on investment over 90 days.

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

Fidelity Advisor Gold  vs.  State Farm Growth

Fidelity Advisor Gold

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Gold are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Fidelity Advisor showed solid returns over the last few months and may actually be approaching a breakup point.

State Farm Growth

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in State Farm Growth are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, State Farm is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fidelity Advisor and State Farm

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

The idea behind Fidelity Advisor Gold and State Farm Growth 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.