Correlation Between Ishares Municipal and Fidelity Salem
Can any of the company-specific risk be diversified away by investing in both Ishares Municipal and Fidelity Salem 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 Ishares Municipal and Fidelity Salem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ishares Municipal Bond and Fidelity Salem Street, you can compare the effects of market volatilities on Ishares Municipal and Fidelity Salem 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 Ishares Municipal with a short position of Fidelity Salem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ishares Municipal and Fidelity Salem.
Diversification Opportunities for Ishares Municipal and Fidelity Salem
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ishares and Fidelity is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ishares Municipal Bond and Fidelity Salem Street in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Salem Street and Ishares Municipal 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 Ishares Municipal Bond are associated (or correlated) with Fidelity Salem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Salem Street has no effect on the direction of Ishares Municipal i.e., Ishares Municipal and Fidelity Salem go up and down completely randomly.
Pair Corralation between Ishares Municipal and Fidelity Salem
Assuming the 90 days horizon Ishares Municipal Bond is expected to generate 0.38 times more return on investment than Fidelity Salem. However, Ishares Municipal Bond is 2.64 times less risky than Fidelity Salem. It trades about 0.11 of its potential returns per unit of risk. Fidelity Salem Street is currently generating about -0.31 per unit of risk. If you would invest 1,100 in Ishares Municipal Bond on August 28, 2024 and sell it today you would earn a total of 8.00 from holding Ishares Municipal Bond or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ishares Municipal Bond vs. Fidelity Salem Street
Performance |
| Timeline |
| Ishares Municipal Bond |
| Fidelity Salem Street |
Ishares Municipal and Fidelity Salem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ishares Municipal and Fidelity Salem
The main advantage of trading using opposite Ishares Municipal and Fidelity Salem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ishares Municipal position performs unexpectedly, Fidelity Salem 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 Salem will offset losses from the drop in Fidelity Salem's long position.| Ishares Municipal vs. Champlain Small | Ishares Municipal vs. Small Pany Growth | Ishares Municipal vs. Touchstone Small Cap | Ishares Municipal vs. Ab Small Cap |
| Fidelity Salem vs. Fidelity Total International | Fidelity Salem vs. Fidelity Mega Cap | Fidelity Salem vs. Fidelity International Value |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |