Correlation Between Fidelity Municipal and Fidelity Freedom
Can any of the company-specific risk be diversified away by investing in both Fidelity Municipal and Fidelity Freedom 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 Fidelity Freedom 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 Fidelity Freedom Blend, you can compare the effects of market volatilities on Fidelity Municipal and Fidelity Freedom 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 Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Municipal and Fidelity Freedom.
Diversification Opportunities for Fidelity Municipal and Fidelity Freedom
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FIDELITY and Fidelity is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Municipal Income and Fidelity Freedom Blend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom Blend 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 Fidelity Freedom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Freedom Blend has no effect on the direction of Fidelity Municipal i.e., Fidelity Municipal and Fidelity Freedom go up and down completely randomly.
Pair Corralation between Fidelity Municipal and Fidelity Freedom
Assuming the 90 days horizon Fidelity Municipal Income is expected to generate 1.01 times more return on investment than Fidelity Freedom. However, Fidelity Municipal is 1.01 times more volatile than Fidelity Freedom Blend. It trades about 0.15 of its potential returns per unit of risk. Fidelity Freedom Blend is currently generating about -0.01 per unit of risk. If you would invest 1,221 in Fidelity Municipal Income on August 28, 2024 and sell it today you would earn a total of 12.00 from holding Fidelity Municipal Income or generate 0.98% 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. Fidelity Freedom Blend
Performance |
| Timeline |
| Fidelity Municipal Income |
| Fidelity Freedom Blend |
Fidelity Municipal and Fidelity Freedom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Municipal and Fidelity Freedom
The main advantage of trading using opposite Fidelity Municipal and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Municipal position performs unexpectedly, Fidelity Freedom 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 Freedom will offset losses from the drop in Fidelity Freedom's long position.| Fidelity Municipal vs. Qs Large Cap | Fidelity Municipal vs. Enhanced Large Pany | Fidelity Municipal vs. Federated Mdt Large | Fidelity Municipal vs. Quantitative U S |
| Fidelity Freedom vs. Fidelity Freedom 2015 | Fidelity Freedom vs. Fidelity Puritan Fund | Fidelity Freedom vs. Fidelity Puritan Fund | Fidelity Freedom vs. Fidelity Pennsylvania Municipal |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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