Correlation Between Fidelity Gnma and Fidelity Municipal
Can any of the company-specific risk be diversified away by investing in both Fidelity 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 Fidelity 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 Fidelity Gnma Fund and Fidelity Municipal Income, you can compare the effects of market volatilities on Fidelity 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 Fidelity Gnma with a short position of Fidelity Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Gnma and Fidelity Municipal.
Diversification Opportunities for Fidelity Gnma and Fidelity Municipal
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Fidelity is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity 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 Fidelity 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 Fidelity 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 Fidelity Gnma i.e., Fidelity Gnma and Fidelity Municipal go up and down completely randomly.
Pair Corralation between Fidelity Gnma and Fidelity Municipal
Assuming the 90 days horizon Fidelity Gnma is expected to generate 1.4 times less return on investment than Fidelity Municipal. In addition to that, Fidelity Gnma is 1.87 times more volatile than Fidelity Municipal Income. It trades about 0.03 of its total potential returns per unit of risk. Fidelity Municipal Income is currently generating about 0.07 per unit of volatility. If you would invest 1,132 in Fidelity Municipal Income on August 24, 2024 and sell it today you would earn a total of 98.00 from holding Fidelity Municipal Income or generate 8.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Gnma Fund vs. Fidelity Municipal Income
Performance |
| Timeline |
| Fidelity Gnma |
| Fidelity Municipal Income |
Fidelity Gnma and Fidelity Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Gnma and Fidelity Municipal
The main advantage of trading using opposite Fidelity Gnma and Fidelity Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity 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.| Fidelity Gnma vs. Fidelity Government Income | Fidelity Gnma vs. Fidelity Short Term Bond | Fidelity Gnma vs. Fidelity Total Bond | Fidelity Gnma vs. Fidelity New Markets |
| Fidelity Municipal vs. Fidelity Tax Free Bond | Fidelity Municipal vs. Fidelity Intermediate Municipal | Fidelity Municipal vs. Fidelity Limited Term | Fidelity Municipal vs. Fidelity Gnma Fund |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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