Correlation Between Fidelity Minnesota and Fidelity Necticut
Can any of the company-specific risk be diversified away by investing in both Fidelity Minnesota and Fidelity Necticut 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 Minnesota and Fidelity Necticut into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Minnesota Municipal and Fidelity Necticut Municipal, you can compare the effects of market volatilities on Fidelity Minnesota and Fidelity Necticut 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 Minnesota with a short position of Fidelity Necticut. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Minnesota and Fidelity Necticut.
Diversification Opportunities for Fidelity Minnesota and Fidelity Necticut
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Fidelity and Fidelity is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Minnesota Municipal and Fidelity Necticut Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Necticut and Fidelity Minnesota 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 Minnesota Municipal are associated (or correlated) with Fidelity Necticut. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Necticut has no effect on the direction of Fidelity Minnesota i.e., Fidelity Minnesota and Fidelity Necticut go up and down completely randomly.
Pair Corralation between Fidelity Minnesota and Fidelity Necticut
Assuming the 90 days horizon Fidelity Minnesota is expected to generate 1.1 times less return on investment than Fidelity Necticut. But when comparing it to its historical volatility, Fidelity Minnesota Municipal is 1.07 times less risky than Fidelity Necticut. It trades about 0.14 of its potential returns per unit of risk. Fidelity Necticut Municipal is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,061 in Fidelity Necticut Municipal on September 1, 2024 and sell it today you would earn a total of 42.00 from holding Fidelity Necticut Municipal or generate 3.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Fidelity Minnesota Municipal vs. Fidelity Necticut Municipal
Performance |
| Timeline |
| Fidelity Minnesota |
| Fidelity Necticut |
Fidelity Minnesota and Fidelity Necticut Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Minnesota and Fidelity Necticut
The main advantage of trading using opposite Fidelity Minnesota and Fidelity Necticut positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Minnesota position performs unexpectedly, Fidelity Necticut 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 Necticut will offset losses from the drop in Fidelity Necticut's long position.The idea behind Fidelity Minnesota Municipal and Fidelity Necticut Municipal pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 CEOs Directory module to screen CEOs from public companies around the world.
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