Correlation Between Fidelity Michigan and Fidelity Necticut
Can any of the company-specific risk be diversified away by investing in both Fidelity Michigan and Fidelity Necticut 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 Michigan and Fidelity Necticut into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Michigan Municipal and Fidelity Necticut Municipal, you can compare the effects of market volatilities on Fidelity Michigan and Fidelity Necticut 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 Michigan with a short position of Fidelity Necticut. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Michigan and Fidelity Necticut.
Diversification Opportunities for Fidelity Michigan and Fidelity Necticut
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Fidelity and Fidelity is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Michigan Municipal and Fidelity Necticut Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Necticut and Fidelity Michigan 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 Michigan Municipal are associated (or correlated) with Fidelity Necticut. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Necticut has no effect on the direction of Fidelity Michigan i.e., Fidelity Michigan and Fidelity Necticut go up and down completely randomly.
Pair Corralation between Fidelity Michigan and Fidelity Necticut
Assuming the 90 days horizon Fidelity Michigan is expected to generate 1.1 times less return on investment than Fidelity Necticut. In addition to that, Fidelity Michigan is 1.18 times more volatile than Fidelity Necticut Municipal. It trades about 0.41 of its total potential returns per unit of risk. Fidelity Necticut Municipal is currently generating about 0.54 per unit of volatility. If you would invest 1,097 in Fidelity Necticut Municipal on June 30, 2024 and sell it today you would earn a total of 11.00 from holding Fidelity Necticut Municipal or generate 1.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 95.45% |
Values | Daily Returns |
Fidelity Michigan Municipal vs. Fidelity Necticut Municipal
Performance |
Timeline |
Fidelity Michigan |
Fidelity Necticut |
Fidelity Michigan and Fidelity Necticut Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fidelity Michigan and Fidelity Necticut
The main advantage of trading using opposite Fidelity Michigan and Fidelity Necticut positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Michigan position performs unexpectedly, Fidelity Necticut 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 Necticut will offset losses from the drop in Fidelity Necticut's long position.Fidelity Michigan vs. Fidelity Freedom 2015 | Fidelity Michigan vs. Fidelity Puritan Fund | Fidelity Michigan vs. Fidelity Puritan Fund | Fidelity Michigan vs. Fidelity Pennsylvania 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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