Correlation Between Fidelity Municipal and Fidelity Freedom
Can any of the company-specific risk be diversified away by investing in both Fidelity Municipal and Fidelity Freedom 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 Municipal and Fidelity Freedom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Municipal Income and Fidelity Freedom 2015, you can compare the effects of market volatilities on Fidelity Municipal and Fidelity Freedom 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 Municipal with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Municipal and Fidelity Freedom.
Diversification Opportunities for Fidelity Municipal and Fidelity Freedom
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fidelity and Fidelity is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Municipal Income and Fidelity Freedom 2015 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom 2015 and Fidelity 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 Fidelity Municipal Income are associated (or correlated) with Fidelity Freedom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Freedom 2015 has no effect on the direction of Fidelity Municipal i.e., Fidelity Municipal and Fidelity Freedom go up and down completely randomly.
Pair Corralation between Fidelity Municipal and Fidelity Freedom
Assuming the 90 days horizon Fidelity Municipal is expected to generate 2.28 times less return on investment than Fidelity Freedom. But when comparing it to its historical volatility, Fidelity Municipal Income is 6.11 times less risky than Fidelity Freedom. It trades about 0.37 of its potential returns per unit of risk. Fidelity Freedom 2015 is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,182 in Fidelity Freedom 2015 on August 31, 2024 and sell it today you would earn a total of 14.00 from holding Fidelity Freedom 2015 or generate 1.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Fidelity Municipal Income vs. Fidelity Freedom 2015
Performance |
| Timeline |
| Fidelity Municipal Income |
| Fidelity Freedom 2015 |
Fidelity Municipal and Fidelity Freedom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Municipal and Fidelity Freedom
The main advantage of trading using opposite Fidelity Municipal and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Municipal position performs unexpectedly, Fidelity Freedom 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 Freedom will offset losses from the drop in Fidelity Freedom's long position.| Fidelity Municipal vs. Dreyfusstandish Global Fixed | Fidelity Municipal vs. Wasatch Global Opportunities | Fidelity Municipal vs. Pimco Global Multi Asset | Fidelity Municipal vs. Morgan Stanley Global |
| Fidelity Freedom vs. Siit High Yield | Fidelity Freedom vs. Blackrock High Yield | Fidelity Freedom vs. Western Asset High | Fidelity Freedom vs. American Century High |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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