Correlation Between Fidelity California and California Municipal
Can any of the company-specific risk be diversified away by investing in both Fidelity California and California 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 Fidelity California and California Municipal 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 California Municipal Portfolio, you can compare the effects of market volatilities on Fidelity California and California 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 Fidelity California with a short position of California Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity California and California Municipal.
Diversification Opportunities for Fidelity California and California Municipal
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fidelity and California is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity California Municipal and California Municipal Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Municipal 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 California Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Municipal has no effect on the direction of Fidelity California i.e., Fidelity California and California Municipal go up and down completely randomly.
Pair Corralation between Fidelity California and California Municipal
Assuming the 90 days horizon Fidelity California Municipal is expected to under-perform the California Municipal. In addition to that, Fidelity California is 1.84 times more volatile than California Municipal Portfolio. It trades about -0.25 of its total potential returns per unit of risk. California Municipal Portfolio is currently generating about -0.35 per unit of volatility. If you would invest 1,398 in California Municipal Portfolio on October 12, 2024 and sell it today you would lose (17.00) from holding California Municipal Portfolio or give up 1.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity California Municipal vs. California Municipal Portfolio
Performance |
| Timeline |
| Fidelity California |
| California Municipal |
Fidelity California and California Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity California and California Municipal
The main advantage of trading using opposite Fidelity California and California Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity California position performs unexpectedly, California 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 California Municipal will offset losses from the drop in California Municipal's 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 |
| California Municipal vs. Ab Global E | California Municipal vs. Ab Global E | California Municipal vs. Ab Global E | California Municipal vs. Ab Minnesota Portfolio |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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