Correlation Between Fidelity Tax-free and Fidelity Intermediate
Can any of the company-specific risk be diversified away by investing in both Fidelity Tax-free and Fidelity Intermediate 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 Tax-free and Fidelity Intermediate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Tax Free Bond and Fidelity Intermediate Municipal, you can compare the effects of market volatilities on Fidelity Tax-free and Fidelity Intermediate 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 Tax-free with a short position of Fidelity Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Tax-free and Fidelity Intermediate.
Diversification Opportunities for Fidelity Tax-free and Fidelity Intermediate
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Fidelity is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Tax Free Bond and Fidelity Intermediate Municipa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Intermediate and Fidelity Tax-free 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 Tax Free Bond are associated (or correlated) with Fidelity Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Intermediate has no effect on the direction of Fidelity Tax-free i.e., Fidelity Tax-free and Fidelity Intermediate go up and down completely randomly.
Pair Corralation between Fidelity Tax-free and Fidelity Intermediate
Assuming the 90 days horizon Fidelity Tax Free Bond is expected to generate 1.33 times more return on investment than Fidelity Intermediate. However, Fidelity Tax-free is 1.33 times more volatile than Fidelity Intermediate Municipal. It trades about 0.06 of its potential returns per unit of risk. Fidelity Intermediate Municipal is currently generating about 0.07 per unit of risk. If you would invest 1,062 in Fidelity Tax Free Bond on November 3, 2024 and sell it today you would earn a total of 33.00 from holding Fidelity Tax Free Bond or generate 3.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
Fidelity Tax Free Bond vs. Fidelity Intermediate Municipa
Performance |
| Timeline |
| Fidelity Tax Free |
| Fidelity Intermediate |
Fidelity Tax-free and Fidelity Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Tax-free and Fidelity Intermediate
The main advantage of trading using opposite Fidelity Tax-free and Fidelity Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Tax-free position performs unexpectedly, Fidelity Intermediate 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 Intermediate will offset losses from the drop in Fidelity Intermediate's long position.| Fidelity Tax-free vs. Rational Defensive Growth | Fidelity Tax-free vs. Stringer Growth Fund | Fidelity Tax-free vs. Growth Portfolio Class | Fidelity Tax-free vs. Tfa Alphagen Growth |
| Fidelity Intermediate vs. Fidelity Limited Term | Fidelity Intermediate vs. Fidelity Municipal Income | Fidelity Intermediate vs. Fidelity Tax Free Bond | Fidelity Intermediate vs. Fidelity Advisor Floating |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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