Correlation Between Fidelity California and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Fidelity California and Dow Jones 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 California and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity California Municipal and Dow Jones Industrial, you can compare the effects of market volatilities on Fidelity California and Dow Jones 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 California with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity California and Dow Jones.
Diversification Opportunities for Fidelity California and Dow Jones
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fidelity and Dow is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity California Municipal and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Fidelity California 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 California Municipal are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Fidelity California i.e., Fidelity California and Dow Jones go up and down completely randomly.
Pair Corralation between Fidelity California and Dow Jones
Assuming the 90 days horizon Fidelity California Municipal is expected to generate 0.38 times more return on investment than Dow Jones. However, Fidelity California Municipal is 2.63 times less risky than Dow Jones. It trades about -0.01 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.13 per unit of risk. If you would invest 1,222 in Fidelity California Municipal on October 11, 2024 and sell it today you would lose (2.00) from holding Fidelity California Municipal or give up 0.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.62% |
| Values | Daily Returns |
Fidelity California Municipal vs. Dow Jones Industrial
Performance |
| Timeline |
Fidelity California and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Fidelity California Municipal
Pair trading matchups for Fidelity California
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Fidelity California and Dow Jones
The main advantage of trading using opposite Fidelity California and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity California position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Fidelity California vs. T Rowe Price | Fidelity California vs. Alliancebernstein National Municipalome | Fidelity California vs. Virtus Seix Government | Fidelity California vs. Franklin Adjustable Government |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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