Correlation Between Fidelity Freedom and Fidelity Municipal
Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom 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 Freedom 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 Freedom 2015 and Fidelity Municipal Income, you can compare the effects of market volatilities on Fidelity Freedom 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 Freedom with a short position of Fidelity Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Fidelity Municipal.
Diversification Opportunities for Fidelity Freedom and Fidelity Municipal
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Fidelity is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom 2015 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 Freedom 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 Freedom 2015 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 Freedom i.e., Fidelity Freedom and Fidelity Municipal go up and down completely randomly.
Pair Corralation between Fidelity Freedom and Fidelity Municipal
Assuming the 90 days horizon Fidelity Freedom 2015 is expected to generate 1.7 times more return on investment than Fidelity Municipal. However, Fidelity Freedom is 1.7 times more volatile than Fidelity Municipal Income. It trades about 0.08 of its potential returns per unit of risk. Fidelity Municipal Income is currently generating about 0.07 per unit of risk. If you would invest 1,007 in Fidelity Freedom 2015 on August 29, 2024 and sell it today you would earn a total of 183.00 from holding Fidelity Freedom 2015 or generate 18.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Freedom 2015 vs. Fidelity Municipal Income
Performance |
| Timeline |
| Fidelity Freedom 2015 |
| Fidelity Municipal Income |
Fidelity Freedom and Fidelity Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Freedom and Fidelity Municipal
The main advantage of trading using opposite Fidelity Freedom and Fidelity Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom 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 Freedom vs. Copeland Risk Managed | Fidelity Freedom vs. Pace High Yield | Fidelity Freedom vs. Ppm High Yield | Fidelity Freedom vs. Artisan High Income |
| 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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