Correlation Between Fidelity Municipal and Fidelity Asset
Can any of the company-specific risk be diversified away by investing in both Fidelity Municipal and Fidelity Asset 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 Asset 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 Asset Manager, you can compare the effects of market volatilities on Fidelity Municipal and Fidelity Asset 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 Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Municipal and Fidelity Asset.
Diversification Opportunities for Fidelity Municipal and Fidelity Asset
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Fidelity is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Municipal Income and Fidelity Asset Manager in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Asset Manager 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 Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Asset Manager has no effect on the direction of Fidelity Municipal i.e., Fidelity Municipal and Fidelity Asset go up and down completely randomly.
Pair Corralation between Fidelity Municipal and Fidelity Asset
Assuming the 90 days horizon Fidelity Municipal is expected to generate 1.55 times less return on investment than Fidelity Asset. But when comparing it to its historical volatility, Fidelity Municipal Income is 1.21 times less risky than Fidelity Asset. It trades about 0.08 of its potential returns per unit of risk. Fidelity Asset Manager is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,243 in Fidelity Asset Manager on August 31, 2024 and sell it today you would earn a total of 141.00 from holding Fidelity Asset Manager or generate 11.34% 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 Asset Manager
Performance |
| Timeline |
| Fidelity Municipal Income |
| Fidelity Asset Manager |
Fidelity Municipal and Fidelity Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Municipal and Fidelity Asset
The main advantage of trading using opposite Fidelity Municipal and Fidelity Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Municipal position performs unexpectedly, Fidelity Asset 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 Asset will offset losses from the drop in Fidelity Asset's long position.| Fidelity Municipal vs. Franklin Federal Limited Term | Fidelity Municipal vs. Aqr Long Short Equity | Fidelity Municipal vs. The Short Term | Fidelity Municipal vs. Short Intermediate Bond Fund |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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