Correlation Between Fidelity Municipal and Dreyfus Gnma
Can any of the company-specific risk be diversified away by investing in both Fidelity Municipal and Dreyfus Gnma 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 Municipal and Dreyfus Gnma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Municipal Income and Dreyfus Gnma Fund, you can compare the effects of market volatilities on Fidelity Municipal and Dreyfus Gnma 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 Municipal with a short position of Dreyfus Gnma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Municipal and Dreyfus Gnma.
Diversification Opportunities for Fidelity Municipal and Dreyfus Gnma
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Dreyfus is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Municipal Income and Dreyfus Gnma Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Gnma and Fidelity Municipal 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 Municipal Income are associated (or correlated) with Dreyfus Gnma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Gnma has no effect on the direction of Fidelity Municipal i.e., Fidelity Municipal and Dreyfus Gnma go up and down completely randomly.
Pair Corralation between Fidelity Municipal and Dreyfus Gnma
Assuming the 90 days horizon Fidelity Municipal Income is expected to generate 1.08 times more return on investment than Dreyfus Gnma. However, Fidelity Municipal is 1.08 times more volatile than Dreyfus Gnma Fund. It trades about 0.14 of its potential returns per unit of risk. Dreyfus Gnma Fund is currently generating about -0.07 per unit of risk. If you would invest 1,217 in Fidelity Municipal Income on August 25, 2024 and sell it today you would earn a total of 12.00 from holding Fidelity Municipal Income or generate 0.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Municipal Income vs. Dreyfus Gnma Fund
Performance |
| Timeline |
| Fidelity Municipal Income |
| Dreyfus Gnma |
Fidelity Municipal and Dreyfus Gnma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Municipal and Dreyfus Gnma
The main advantage of trading using opposite Fidelity Municipal and Dreyfus Gnma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Municipal position performs unexpectedly, Dreyfus Gnma 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 Dreyfus Gnma will offset losses from the drop in Dreyfus Gnma's long position.| Fidelity Municipal vs. Fidelity Freedom 2015 | Fidelity Municipal vs. Fidelity Puritan Fund | Fidelity Municipal vs. Fidelity Puritan Fund | Fidelity Municipal vs. Fidelity Pennsylvania Municipal |
| Dreyfus Gnma vs. Dreyfusstandish Global Fixed | Dreyfus Gnma vs. Dreyfusstandish Global Fixed | Dreyfus Gnma vs. Dreyfus High Yield | Dreyfus Gnma vs. Dreyfus High Yield |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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