Correlation Between Fidelity Advisor and Smallcap

Can any of the company-specific risk be diversified away by investing in both Fidelity Advisor and Smallcap 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 Smallcap 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 Smallcap Sp 600, you can compare the effects of market volatilities on Fidelity Advisor and Smallcap 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 Smallcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Advisor and Smallcap.

Diversification Opportunities for Fidelity Advisor and Smallcap

0.32

Correlation Coefficient

Fidelity Advisor  Smallcap

Weak diversification

The 3 months correlation between Fidelity and Smallcap is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advisor Gold and Smallcap Sp 600 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smallcap Sp 600 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 Smallcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smallcap Sp 600 has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and Smallcap go up and down completely randomly.

Pair Corralation between Fidelity Advisor and Smallcap

Assuming the 90 days horizon Fidelity Advisor is expected to generate 1.5 times less return on investment than Smallcap. In addition to that, Fidelity Advisor is 1.93 times more volatile than Smallcap Sp 600. It trades about 0.06 of its total potential returns per unit of risk. Smallcap Sp 600 is currently generating about 0.18 per unit of volatility. If you would invest  2,241  in Smallcap Sp 600 on April 30, 2025 and sell it today you would earn a total of  290.00  from holding Smallcap Sp 600 or generate 12.94% return on investment over 90 days.

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

Fidelity Advisor Gold  vs.  Smallcap Sp 600

Fidelity Advisor Gold

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Gold are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Fidelity Advisor may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Smallcap Sp 600

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Smallcap Sp 600 are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Smallcap showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fidelity Advisor and Smallcap

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

The idea behind Fidelity Advisor Gold and Smallcap Sp 600 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.