Correlation Between Pace Municipal and Fidelity Advisor
Can any of the company-specific risk be diversified away by investing in both Pace Municipal and Fidelity Advisor 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 Advisor 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 Advisor 529, you can compare the effects of market volatilities on Pace Municipal and Fidelity Advisor 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 Advisor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace Municipal and Fidelity Advisor.
Diversification Opportunities for Pace Municipal and Fidelity Advisor
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pace and Fidelity is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Pace Municipal Fixed and Fidelity Advisor 529 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor 529 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 Advisor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Advisor 529 has no effect on the direction of Pace Municipal i.e., Pace Municipal and Fidelity Advisor go up and down completely randomly.
Pair Corralation between Pace Municipal and Fidelity Advisor
Assuming the 90 days horizon Pace Municipal Fixed is expected to generate 0.89 times more return on investment than Fidelity Advisor. However, Pace Municipal Fixed is 1.13 times less risky than Fidelity Advisor. It trades about 0.06 of its potential returns per unit of risk. Fidelity Advisor 529 is currently generating about -0.05 per unit of risk. If you would invest 1,224 in Pace Municipal Fixed on September 13, 2024 and sell it today you would earn a total of 7.00 from holding Pace Municipal Fixed or generate 0.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pace Municipal Fixed vs. Fidelity Advisor 529
Performance |
| Timeline |
| Pace Municipal Fixed |
| Fidelity Advisor 529 |
Pace Municipal and Fidelity Advisor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace Municipal and Fidelity Advisor
The main advantage of trading using opposite Pace Municipal and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace Municipal position performs unexpectedly, Fidelity Advisor 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 Advisor will offset losses from the drop in Fidelity Advisor's long position.| Pace Municipal vs. Multisector Bond Sma | Pace Municipal vs. Franklin High Yield | Pace Municipal vs. Touchstone Premium Yield | Pace Municipal vs. Western Asset Municipal |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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