Correlation Between T Rowe and Fidelity Municipal
Can any of the company-specific risk be diversified away by investing in both T Rowe 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 T Rowe and Fidelity Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between T Rowe Price and Fidelity Municipal Income, you can compare the effects of market volatilities on T Rowe 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 T Rowe with a short position of Fidelity Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rowe and Fidelity Municipal.
Diversification Opportunities for T Rowe and Fidelity Municipal
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between PRTAX and Fidelity is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding T Rowe Price 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 T Rowe 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 T Rowe Price 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 T Rowe i.e., T Rowe and Fidelity Municipal go up and down completely randomly.
Pair Corralation between T Rowe and Fidelity Municipal
Assuming the 90 days horizon T Rowe Price is expected to generate 1.13 times more return on investment than Fidelity Municipal. However, T Rowe is 1.13 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 942.00 in T Rowe Price on August 29, 2024 and sell it today you would earn a total of 11.00 from holding T Rowe Price or generate 1.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
T Rowe Price vs. Fidelity Municipal Income
Performance |
| Timeline |
| T Rowe Price |
| Fidelity Municipal Income |
T Rowe and Fidelity Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T Rowe and Fidelity Municipal
The main advantage of trading using opposite T Rowe and Fidelity Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rowe 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.The idea behind T Rowe Price and Fidelity Municipal Income pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Fidelity Municipal vs. Fidelity Tax Free Bond | Fidelity Municipal vs. Fidelity Intermediate Municipal | Fidelity Municipal vs. Fidelity Limited Term | Fidelity Municipal vs. Fidelity Gnma Fund |
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.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |