Correlation Between Fidelity Municipal and Fidelity Pennsylvania
Can any of the company-specific risk be diversified away by investing in both Fidelity Municipal and Fidelity Pennsylvania 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 Pennsylvania 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 Pennsylvania Municipal, you can compare the effects of market volatilities on Fidelity Municipal and Fidelity Pennsylvania 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 Pennsylvania. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Municipal and Fidelity Pennsylvania.
Diversification Opportunities for Fidelity Municipal and Fidelity Pennsylvania
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Fidelity is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Municipal Income and Fidelity Pennsylvania Municipa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Pennsylvania 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 Pennsylvania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Pennsylvania has no effect on the direction of Fidelity Municipal i.e., Fidelity Municipal and Fidelity Pennsylvania go up and down completely randomly.
Pair Corralation between Fidelity Municipal and Fidelity Pennsylvania
Assuming the 90 days horizon Fidelity Municipal is expected to generate 1.09 times less return on investment than Fidelity Pennsylvania. In addition to that, Fidelity Municipal is 1.12 times more volatile than Fidelity Pennsylvania Municipal. It trades about 0.2 of its total potential returns per unit of risk. Fidelity Pennsylvania Municipal is currently generating about 0.24 per unit of volatility. If you would invest 1,044 in Fidelity Pennsylvania Municipal on August 30, 2024 and sell it today you would earn a total of 15.00 from holding Fidelity Pennsylvania Municipal or generate 1.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Municipal Income vs. Fidelity Pennsylvania Municipa
Performance |
| Timeline |
| Fidelity Municipal Income |
| Fidelity Pennsylvania |
Fidelity Municipal and Fidelity Pennsylvania Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Municipal and Fidelity Pennsylvania
The main advantage of trading using opposite Fidelity Municipal and Fidelity Pennsylvania positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Municipal position performs unexpectedly, Fidelity Pennsylvania 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 Pennsylvania will offset losses from the drop in Fidelity Pennsylvania's long position.| Fidelity Municipal vs. Fidelity Freedom 2015 | Fidelity Municipal vs. Fidelity Puritan Fund | Fidelity Municipal vs. Fidelity Puritan Fund | Fidelity Municipal 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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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