Correlation Between California High-yield and Fidelity Series
Can any of the company-specific risk be diversified away by investing in both California High-yield and Fidelity Series 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 California High-yield and Fidelity Series into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between California High Yield Municipal and Fidelity Series Canada, you can compare the effects of market volatilities on California High-yield and Fidelity Series 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 California High-yield with a short position of Fidelity Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of California High-yield and Fidelity Series.
Diversification Opportunities for California High-yield and Fidelity Series
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between California and Fidelity is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding California High Yield Municipa and Fidelity Series Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Series Canada and California High-yield 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 California High Yield Municipal are associated (or correlated) with Fidelity Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Series Canada has no effect on the direction of California High-yield i.e., California High-yield and Fidelity Series go up and down completely randomly.
Pair Corralation between California High-yield and Fidelity Series
Assuming the 90 days horizon California High-yield is expected to generate 6.19 times less return on investment than Fidelity Series. But when comparing it to its historical volatility, California High Yield Municipal is 2.39 times less risky than Fidelity Series. It trades about 0.07 of its potential returns per unit of risk. Fidelity Series Canada is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,588 in Fidelity Series Canada on September 2, 2024 and sell it today you would earn a total of 124.00 from holding Fidelity Series Canada or generate 7.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
California High Yield Municipa vs. Fidelity Series Canada
Performance |
| Timeline |
| California High Yield |
| Fidelity Series Canada |
California High-yield and Fidelity Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California High-yield and Fidelity Series
The main advantage of trading using opposite California High-yield and Fidelity Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California High-yield position performs unexpectedly, Fidelity Series 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 Series will offset losses from the drop in Fidelity Series' long position.| California High-yield vs. Equity Growth Fund | California High-yield vs. Income Growth Fund | California High-yield vs. Diversified Bond Fund | California High-yield vs. Emerging Markets Fund |
| Fidelity Series vs. Fidelity Freedom 2015 | Fidelity Series vs. Fidelity Puritan Fund | Fidelity Series vs. Fidelity Puritan Fund | Fidelity Series vs. Fidelity Pennsylvania Municipal |
Check out your portfolio center.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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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