Correlation Between Fidelity Freedom and Fidelity California
Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and Fidelity California 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 California into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Freedom Index and Fidelity California Municipal, you can compare the effects of market volatilities on Fidelity Freedom and Fidelity California 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 California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Fidelity California.
Diversification Opportunities for Fidelity Freedom and Fidelity California
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Fidelity is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom Index and Fidelity California Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity California 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 Index are associated (or correlated) with Fidelity California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity California has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Fidelity California go up and down completely randomly.
Pair Corralation between Fidelity Freedom and Fidelity California
Assuming the 90 days horizon Fidelity Freedom Index is expected to under-perform the Fidelity California. In addition to that, Fidelity Freedom is 3.48 times more volatile than Fidelity California Municipal. It trades about -0.24 of its total potential returns per unit of risk. Fidelity California Municipal is currently generating about -0.31 per unit of volatility. If you would invest 1,241 in Fidelity California Municipal on October 11, 2024 and sell it today you would lose (21.00) from holding Fidelity California Municipal or give up 1.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Freedom Index vs. Fidelity California Municipal
Performance |
| Timeline |
| Fidelity Freedom Index |
| Fidelity California |
Fidelity Freedom and Fidelity California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Freedom and Fidelity California
The main advantage of trading using opposite Fidelity Freedom and Fidelity California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, Fidelity California 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 California will offset losses from the drop in Fidelity California's long position.| Fidelity Freedom vs. Morningstar Municipal Bond | Fidelity Freedom vs. Nuveen Strategic Municipal | Fidelity Freedom vs. Alpine Ultra Short | Fidelity Freedom vs. Inverse Government Long |
| Fidelity California vs. T Rowe Price | Fidelity California vs. Alliancebernstein National Municipalome | Fidelity California vs. Virtus Seix Government | Fidelity California vs. Franklin Adjustable Government |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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