Correlation Between Fidelity Advisor and Prudential Financial

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

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

Diversification Opportunities for Fidelity Advisor and Prudential Financial

1.0

Correlation Coefficient

Fidelity Advisor  Prudential Financial

No risk reduction

The 3 months correlation between Fidelity and Prudential is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advisor Financial and Prudential Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Financial 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 Financial are associated (or correlated) with Prudential Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Financial has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and Prudential Financial go up and down completely randomly.

Pair Corralation between Fidelity Advisor and Prudential Financial

Assuming the 90 days horizon Fidelity Advisor Financial is expected to generate 0.97 times more return on investment than Prudential Financial. However, Fidelity Advisor Financial is 1.04 times less risky than Prudential Financial. It trades about -0.07 of its potential returns per unit of risk. Prudential Financial Services is currently generating about -0.07 per unit of risk. If you would invest  3,845  in Fidelity Advisor Financial on January 25, 2025 and sell it today you would lose (358.00) from holding Fidelity Advisor Financial or give up 9.31% of portfolio value over 90 days.

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

Fidelity Advisor Financial  vs.  Prudential Financial Services

Fidelity Advisor Fin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity Advisor Financial has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Prudential Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prudential Financial Services has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Fidelity Advisor and Prudential Financial

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

The idea behind Fidelity Advisor Financial and Prudential Financial Services 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.