Correlation Between Dreyfus Gnma and Fidelity Municipal
Can any of the company-specific risk be diversified away by investing in both Dreyfus Gnma and Fidelity Municipal 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 Dreyfus Gnma and Fidelity Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dreyfus Gnma Fund and Fidelity Municipal Income, you can compare the effects of market volatilities on Dreyfus Gnma and Fidelity Municipal 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 Dreyfus Gnma with a short position of Fidelity Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus Gnma and Fidelity Municipal.
Diversification Opportunities for Dreyfus Gnma and Fidelity Municipal
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dreyfus and Fidelity is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Gnma Fund and Fidelity Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Municipal Income and Dreyfus Gnma 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 Dreyfus Gnma Fund are associated (or correlated) with Fidelity Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Municipal Income has no effect on the direction of Dreyfus Gnma i.e., Dreyfus Gnma and Fidelity Municipal go up and down completely randomly.
Pair Corralation between Dreyfus Gnma and Fidelity Municipal
Assuming the 90 days horizon Dreyfus Gnma Fund is expected to under-perform the Fidelity Municipal. But the mutual fund apears to be less risky and, when comparing its historical volatility, Dreyfus Gnma Fund is 1.08 times less risky than Fidelity Municipal. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Fidelity Municipal Income is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,217 in Fidelity Municipal Income on August 25, 2024 and sell it today you would earn a total of 12.00 from holding Fidelity Municipal Income or generate 0.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dreyfus Gnma Fund vs. Fidelity Municipal Income
Performance |
| Timeline |
| Dreyfus Gnma |
| Fidelity Municipal Income |
Dreyfus Gnma and Fidelity Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfus Gnma and Fidelity Municipal
The main advantage of trading using opposite Dreyfus Gnma and Fidelity Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus Gnma position performs unexpectedly, Fidelity Municipal 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 Municipal will offset losses from the drop in Fidelity Municipal's long position.| Dreyfus Gnma vs. Dreyfusstandish Global Fixed | Dreyfus Gnma vs. Dreyfusstandish Global Fixed | Dreyfus Gnma vs. Dreyfus High Yield | Dreyfus Gnma vs. Dreyfus High Yield |
| Fidelity Municipal vs. Fidelity Freedom 2015 | Fidelity Municipal vs. Fidelity Puritan Fund | Fidelity Municipal vs. Fidelity Puritan Fund | Fidelity Municipal 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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