Correlation Between Fidelity California and California High-yield
Can any of the company-specific risk be diversified away by investing in both Fidelity California and California High-yield 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 High-yield 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 High Yield Municipal, you can compare the effects of market volatilities on Fidelity California and California High-yield 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 High-yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity California and California High-yield.
Diversification Opportunities for Fidelity California and California High-yield
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and California is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity California Municipal and California High Yield Municipa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California High Yield 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 High-yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California High Yield has no effect on the direction of Fidelity California i.e., Fidelity California and California High-yield go up and down completely randomly.
Pair Corralation between Fidelity California and California High-yield
Assuming the 90 days horizon Fidelity California Municipal is expected to generate 1.04 times more return on investment than California High-yield. However, Fidelity California is 1.04 times more volatile than California High Yield Municipal. It trades about 0.15 of its potential returns per unit of risk. California High Yield Municipal is currently generating about 0.15 per unit of risk. If you would invest 1,217 in Fidelity California Municipal on August 27, 2024 and sell it today you would earn a total of 13.00 from holding Fidelity California Municipal or generate 1.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity California Municipal vs. California High Yield Municipa
Performance |
| Timeline |
| Fidelity California |
| California High Yield |
Fidelity California and California High-yield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity California and California High-yield
The main advantage of trading using opposite Fidelity California and California High-yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity California position performs unexpectedly, California High-yield 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 High-yield will offset losses from the drop in California High-yield's long position.| Fidelity California vs. Fidelity California Limited | Fidelity California vs. Fidelity Municipal Income | Fidelity California vs. Fidelity Tax Free Bond | Fidelity California vs. Fidelity Limited Term |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |