Correlation Between Profunds Ultrashort and Fidelity Advisor

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

By analyzing existing cross correlation between Profunds Ultrashort Nasdaq 100 and Fidelity Advisor Value, you can compare the effects of market volatilities on Profunds Ultrashort 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 Profunds Ultrashort with a short position of Fidelity Advisor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Profunds Ultrashort and Fidelity Advisor.

Diversification Opportunities for Profunds Ultrashort and Fidelity Advisor

-0.54

Correlation Coefficient

Profunds Ultrashort  Fidelity Advisor

Excellent diversification

The 3 months correlation between Profunds and Fidelity is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Profunds Ultrashort Nasdaq 100 and Fidelity Advisor Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Value and Profunds Ultrashort 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 Profunds Ultrashort Nasdaq 100 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 Value has no effect on the direction of Profunds Ultrashort i.e., Profunds Ultrashort and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Profunds Ultrashort and Fidelity Advisor

Assuming the 90 days horizon Profunds Ultrashort Nasdaq 100 is expected to generate 2.7 times more return on investment than Fidelity Advisor. However, Profunds Ultrashort is 2.7 times more volatile than Fidelity Advisor Value. It trades about 0.15 of its potential returns per unit of risk. Fidelity Advisor Value is currently generating about -0.22 per unit of risk. If you would invest  3,254  in Profunds Ultrashort Nasdaq 100 on January 29, 2024 and sell it today you would earn a total of  217.00  from holding Profunds Ultrashort Nasdaq 100 or generate 6.67% return on investment over 90 days.

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

Profunds Ultrashort Nasdaq 100  vs.  Fidelity Advisor Value

Profunds Ultrashort

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Profunds Ultrashort Nasdaq 100 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Profunds Ultrashort is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Advisor Value

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Value are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Fidelity Advisor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Profunds Ultrashort and Fidelity Advisor

The main advantage of trading using opposite Profunds Ultrashort and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Profunds Ultrashort 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.

The idea behind Profunds Ultrashort Nasdaq 100 and Fidelity Advisor Value 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 Commodity Directory module to find actively traded commodities issued by global exchanges.