Correlation Between Kentucky Tax-free and Fidelity Managed
Can any of the company-specific risk be diversified away by investing in both Kentucky Tax-free and Fidelity Managed 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 Kentucky Tax-free and Fidelity Managed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kentucky Tax Free Income and Fidelity Managed Retirement, you can compare the effects of market volatilities on Kentucky Tax-free and Fidelity Managed 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 Kentucky Tax-free with a short position of Fidelity Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kentucky Tax-free and Fidelity Managed.
Diversification Opportunities for Kentucky Tax-free and Fidelity Managed
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kentucky and Fidelity is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Kentucky Tax Free Income and Fidelity Managed Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Managed Ret and Kentucky 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 Kentucky Tax Free Income are associated (or correlated) with Fidelity Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Managed Ret has no effect on the direction of Kentucky Tax-free i.e., Kentucky Tax-free and Fidelity Managed go up and down completely randomly.
Pair Corralation between Kentucky Tax-free and Fidelity Managed
Assuming the 90 days horizon Kentucky Tax-free is expected to generate 2.51 times less return on investment than Fidelity Managed. But when comparing it to its historical volatility, Kentucky Tax Free Income is 1.79 times less risky than Fidelity Managed. It trades about 0.06 of its potential returns per unit of risk. Fidelity Managed Retirement is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,658 in Fidelity Managed Retirement on August 25, 2024 and sell it today you would earn a total of 771.00 from holding Fidelity Managed Retirement or generate 16.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Kentucky Tax Free Income vs. Fidelity Managed Retirement
Performance |
| Timeline |
| Kentucky Tax Free |
| Fidelity Managed Ret |
Kentucky Tax-free and Fidelity Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kentucky Tax-free and Fidelity Managed
The main advantage of trading using opposite Kentucky Tax-free and Fidelity Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kentucky Tax-free position performs unexpectedly, Fidelity Managed 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 Managed will offset losses from the drop in Fidelity Managed's long position.| Kentucky Tax-free vs. Kinetics Global Fund | Kentucky Tax-free vs. Dodge Global Stock | Kentucky Tax-free vs. Morgan Stanley Global | Kentucky Tax-free vs. Vanguard Global Credit |
| Fidelity Managed vs. Fidelity Freedom 2015 | Fidelity Managed vs. Fidelity Puritan Fund | Fidelity Managed vs. Fidelity Puritan Fund | Fidelity Managed 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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