Correlation Between Fidelity Municipal and Fidelity Mid
Can any of the company-specific risk be diversified away by investing in both Fidelity Municipal and Fidelity Mid 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 Mid 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 Mid Cap, you can compare the effects of market volatilities on Fidelity Municipal and Fidelity Mid 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 Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Municipal and Fidelity Mid.
Diversification Opportunities for Fidelity Municipal and Fidelity Mid
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Fidelity is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Municipal Income and Fidelity Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Mid Cap 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 Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Mid Cap has no effect on the direction of Fidelity Municipal i.e., Fidelity Municipal and Fidelity Mid go up and down completely randomly.
Pair Corralation between Fidelity Municipal and Fidelity Mid
Assuming the 90 days horizon Fidelity Municipal Income is expected to generate 0.3 times more return on investment than Fidelity Mid. However, Fidelity Municipal Income is 3.33 times less risky than Fidelity Mid. It trades about -0.1 of its potential returns per unit of risk. Fidelity Mid Cap is currently generating about -0.1 per unit of risk. If you would invest 1,227 in Fidelity Municipal Income on October 26, 2024 and sell it today you would lose (13.00) from holding Fidelity Municipal Income or give up 1.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.5% |
| Values | Daily Returns |
Fidelity Municipal Income vs. Fidelity Mid Cap
Performance |
| Timeline |
| Fidelity Municipal Income |
| Fidelity Mid Cap |
Fidelity Municipal and Fidelity Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Municipal and Fidelity Mid
The main advantage of trading using opposite Fidelity Municipal and Fidelity Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Municipal position performs unexpectedly, Fidelity Mid 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 Mid will offset losses from the drop in Fidelity Mid's long position.| Fidelity Municipal vs. Advent Claymore Convertible | Fidelity Municipal vs. Absolute Convertible Arbitrage | Fidelity Municipal vs. Allianzgi Convertible Income | Fidelity Municipal vs. Virtus Convertible |
| Fidelity Mid vs. Fidelity Small Cap | Fidelity Mid vs. Fidelity International Index | Fidelity Mid vs. Fidelity Large Cap | Fidelity Mid vs. Fidelity Bond Index |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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