Correlation Between Georgia Tax-free and Fidelity Freedom
Can any of the company-specific risk be diversified away by investing in both Georgia Tax-free and Fidelity Freedom 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 Georgia Tax-free and Fidelity Freedom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Georgia Tax Free Bond and Fidelity Freedom Index, you can compare the effects of market volatilities on Georgia Tax-free and Fidelity Freedom 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 Georgia Tax-free with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Georgia Tax-free and Fidelity Freedom.
Diversification Opportunities for Georgia Tax-free and Fidelity Freedom
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Georgia and Fidelity is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Georgia Tax Free Bond and Fidelity Freedom Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom Index and Georgia 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 Georgia Tax Free Bond are associated (or correlated) with Fidelity Freedom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Freedom Index has no effect on the direction of Georgia Tax-free i.e., Georgia Tax-free and Fidelity Freedom go up and down completely randomly.
Pair Corralation between Georgia Tax-free and Fidelity Freedom
Assuming the 90 days horizon Georgia Tax-free is expected to generate 4.06 times less return on investment than Fidelity Freedom. But when comparing it to its historical volatility, Georgia Tax Free Bond is 2.62 times less risky than Fidelity Freedom. It trades about 0.04 of its potential returns per unit of risk. Fidelity Freedom Index is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,052 in Fidelity Freedom Index on October 13, 2024 and sell it today you would earn a total of 513.00 from holding Fidelity Freedom Index or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Georgia Tax Free Bond vs. Fidelity Freedom Index
Performance |
| Timeline |
| Georgia Tax Free |
| Fidelity Freedom Index |
Georgia Tax-free and Fidelity Freedom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Georgia Tax-free and Fidelity Freedom
The main advantage of trading using opposite Georgia Tax-free and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Georgia Tax-free position performs unexpectedly, Fidelity Freedom 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 Freedom will offset losses from the drop in Fidelity Freedom's long position.| Georgia Tax-free vs. Morningstar Defensive Bond | Georgia Tax-free vs. Intermediate Term Bond Fund | Georgia Tax-free vs. Dws Government Money | Georgia Tax-free vs. Western Asset Municipal |
| Fidelity Freedom vs. Pace Municipal Fixed | Fidelity Freedom vs. Old Westbury Municipal | Fidelity Freedom vs. Transamerica Intermediate Muni | Fidelity Freedom vs. Georgia Tax Free Bond |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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