Correlation Between Fidelity Maryland and Fidelity Minnesota
Can any of the company-specific risk be diversified away by investing in both Fidelity Maryland and Fidelity Minnesota 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 Maryland and Fidelity Minnesota into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Maryland Municipal and Fidelity Minnesota Municipal, you can compare the effects of market volatilities on Fidelity Maryland and Fidelity Minnesota 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 Maryland with a short position of Fidelity Minnesota. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Maryland and Fidelity Minnesota.
Diversification Opportunities for Fidelity Maryland and Fidelity Minnesota
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 Maryland Municipal and Fidelity Minnesota Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Minnesota and Fidelity Maryland 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 Maryland Municipal are associated (or correlated) with Fidelity Minnesota. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Minnesota has no effect on the direction of Fidelity Maryland i.e., Fidelity Maryland and Fidelity Minnesota go up and down completely randomly.
Pair Corralation between Fidelity Maryland and Fidelity Minnesota
Assuming the 90 days horizon Fidelity Maryland Municipal is expected to generate 1.17 times more return on investment than Fidelity Minnesota. However, Fidelity Maryland is 1.17 times more volatile than Fidelity Minnesota Municipal. It trades about 0.22 of its potential returns per unit of risk. Fidelity Minnesota Municipal is currently generating about 0.18 per unit of risk. If you would invest 1,073 in Fidelity Maryland Municipal on September 1, 2024 and sell it today you would earn a total of 16.00 from holding Fidelity Maryland Municipal or generate 1.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Fidelity Maryland Municipal vs. Fidelity Minnesota Municipal
Performance |
| Timeline |
| Fidelity Maryland |
| Fidelity Minnesota |
Fidelity Maryland and Fidelity Minnesota Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Maryland and Fidelity Minnesota
The main advantage of trading using opposite Fidelity Maryland and Fidelity Minnesota positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Maryland position performs unexpectedly, Fidelity Minnesota 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 Minnesota will offset losses from the drop in Fidelity Minnesota's long position.| Fidelity Maryland vs. Fidelity Freedom 2015 | Fidelity Maryland vs. Fidelity Puritan Fund | Fidelity Maryland vs. Fidelity Puritan Fund | Fidelity Maryland 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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