Correlation Between Pace Municipal and Fidelity New
Can any of the company-specific risk be diversified away by investing in both Pace Municipal and Fidelity New 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 Pace Municipal and Fidelity New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pace Municipal Fixed and Fidelity New Markets, you can compare the effects of market volatilities on Pace Municipal and Fidelity New 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 Pace Municipal with a short position of Fidelity New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace Municipal and Fidelity New.
Diversification Opportunities for Pace Municipal and Fidelity New
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pace and Fidelity is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Pace Municipal Fixed and Fidelity New Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity New Markets and Pace 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 Pace Municipal Fixed are associated (or correlated) with Fidelity New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity New Markets has no effect on the direction of Pace Municipal i.e., Pace Municipal and Fidelity New go up and down completely randomly.
Pair Corralation between Pace Municipal and Fidelity New
Assuming the 90 days horizon Pace Municipal Fixed is expected to under-perform the Fidelity New. But the mutual fund apears to be less risky and, when comparing its historical volatility, Pace Municipal Fixed is 1.45 times less risky than Fidelity New. The mutual fund trades about -0.11 of its potential returns per unit of risk. The Fidelity New Markets is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,282 in Fidelity New Markets on October 30, 2024 and sell it today you would lose (2.00) from holding Fidelity New Markets or give up 0.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pace Municipal Fixed vs. Fidelity New Markets
Performance |
| Timeline |
| Pace Municipal Fixed |
| Fidelity New Markets |
Pace Municipal and Fidelity New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace Municipal and Fidelity New
The main advantage of trading using opposite Pace Municipal and Fidelity New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace Municipal position performs unexpectedly, Fidelity New 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 New will offset losses from the drop in Fidelity New's long position.| Pace Municipal vs. Pace Smallmedium Value | Pace Municipal vs. Pace International Equity | Pace Municipal vs. Pace International Equity | Pace Municipal vs. Ubs Allocation Fund |
| Fidelity New vs. Gmo High Yield | Fidelity New vs. Virtus High Yield | Fidelity New vs. Siit High Yield | Fidelity New vs. Artisan High Income |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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