Correlation Between Fidelity Short and Fidelity Municipal
Can any of the company-specific risk be diversified away by investing in both Fidelity Short and Fidelity Municipal 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 Short and Fidelity Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Short Duration and Fidelity Municipal Income, you can compare the effects of market volatilities on Fidelity Short and Fidelity Municipal 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 Short with a short position of Fidelity Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Short and Fidelity Municipal.
Diversification Opportunities for Fidelity Short and Fidelity Municipal
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FIDELITY and Fidelity is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Short Duration and Fidelity Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Municipal Income and Fidelity Short 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 Short Duration are associated (or correlated) with Fidelity Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Municipal Income has no effect on the direction of Fidelity Short i.e., Fidelity Short and Fidelity Municipal go up and down completely randomly.
Pair Corralation between Fidelity Short and Fidelity Municipal
Assuming the 90 days horizon Fidelity Short Duration is expected to generate 2.81 times more return on investment than Fidelity Municipal. However, Fidelity Short is 2.81 times more volatile than Fidelity Municipal Income. It trades about 0.15 of its potential returns per unit of risk. Fidelity Municipal Income is currently generating about 0.13 per unit of risk. If you would invest 771.00 in Fidelity Short Duration on August 24, 2024 and sell it today you would earn a total of 134.00 from holding Fidelity Short Duration or generate 17.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Short Duration vs. Fidelity Municipal Income
Performance |
| Timeline |
| Fidelity Short Duration |
| Fidelity Municipal Income |
Fidelity Short and Fidelity Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Short and Fidelity Municipal
The main advantage of trading using opposite Fidelity Short and Fidelity Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Short position performs unexpectedly, Fidelity Municipal 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 Municipal will offset losses from the drop in Fidelity Municipal's long position.| Fidelity Short vs. Fidelity Advisor Limited | Fidelity Short vs. Fidelity Global Bond | Fidelity Short vs. Fidelity Focused High | Fidelity Short vs. Fidelity Global Equity |
| Fidelity Municipal vs. Fidelity Global Bond | Fidelity Municipal vs. Fidelity Short Duration | Fidelity Municipal vs. Aquagold International | Fidelity Municipal vs. Morningstar Unconstrained Allocation |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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