Correlation Between Fidelity New and Fidelity Municipal
Can any of the company-specific risk be diversified away by investing in both Fidelity New 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 New 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 New Markets and Fidelity Municipal Income, you can compare the effects of market volatilities on Fidelity New 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 New with a short position of Fidelity Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity New and Fidelity Municipal.
Diversification Opportunities for Fidelity New and Fidelity Municipal
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fidelity and Fidelity is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity New Markets 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 New 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 New Markets 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 New i.e., Fidelity New and Fidelity Municipal go up and down completely randomly.
Pair Corralation between Fidelity New and Fidelity Municipal
Assuming the 90 days horizon Fidelity New Markets is expected to generate 1.62 times more return on investment than Fidelity Municipal. However, Fidelity New is 1.62 times more volatile than Fidelity Municipal Income. It trades about 0.1 of its potential returns per unit of risk. Fidelity Municipal Income is currently generating about 0.08 per unit of risk. If you would invest 1,074 in Fidelity New Markets on September 12, 2024 and sell it today you would earn a total of 226.00 from holding Fidelity New Markets or generate 21.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity New Markets vs. Fidelity Municipal Income
Performance |
| Timeline |
| Fidelity New Markets |
| Fidelity Municipal Income |
Fidelity New and Fidelity Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity New and Fidelity Municipal
The main advantage of trading using opposite Fidelity New and Fidelity Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity New 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 New vs. Fidelity New Markets | Fidelity New vs. Fidelity New Markets | Fidelity New vs. SCOR PK | Fidelity New vs. Morningstar Unconstrained Allocation |
| Fidelity Municipal vs. Scharf Global Opportunity | Fidelity Municipal vs. Investec Global Franchise | Fidelity Municipal vs. Siit Global Managed | Fidelity Municipal vs. Qs Global Equity |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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