Correlation Between Fidelity Advisor and Advisors Capital

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

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

Diversification Opportunities for Fidelity Advisor and Advisors Capital

0.99

Correlation Coefficient

Fidelity Advisor  Advisors Capital

No risk reduction

The 3 months correlation between Fidelity and Advisors is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advisor Strategic and Advisors Capital Tactical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advisors Capital Tactical 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 Strategic are associated (or correlated) with Advisors Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advisors Capital Tactical has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and Advisors Capital go up and down completely randomly.

Pair Corralation between Fidelity Advisor and Advisors Capital

Assuming the 90 days horizon Fidelity Advisor Strategic is expected to generate 0.78 times more return on investment than Advisors Capital. However, Fidelity Advisor Strategic is 1.27 times less risky than Advisors Capital. It trades about 0.28 of its potential returns per unit of risk. Advisors Capital Tactical is currently generating about 0.19 per unit of risk. If you would invest  1,137  in Fidelity Advisor Strategic on May 20, 2025 and sell it today you would earn a total of  39.00  from holding Fidelity Advisor Strategic or generate 3.43% return on investment over 90 days.

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

Fidelity Advisor Strategic  vs.  Advisors Capital Tactical

Fidelity Advisor Str

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Strategic are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fidelity Advisor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Advisors Capital Tactical

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Advisors Capital Tactical are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Advisors Capital 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 Advisors Capital

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

The idea behind Fidelity Advisor Strategic and Advisors Capital Tactical 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.