Correlation Between Barings Emerging and Fidelity Municipal

Can any of the company-specific risk be diversified away by investing in both Barings Emerging 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 Barings Emerging and Fidelity Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Barings Emerging Markets and Fidelity Municipal Income, you can compare the effects of market volatilities on Barings Emerging 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 Barings Emerging with a short position of Fidelity Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Emerging and Fidelity Municipal.

Diversification Opportunities for Barings Emerging and Fidelity Municipal

-0.18

Correlation Coefficient

Barings Emerging  Fidelity Municipal

Good diversification

The 3 months correlation between Barings and Fidelity is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Barings Emerging Markets 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 Barings Emerging 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 Barings Emerging Markets 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 Barings Emerging i.e., Barings Emerging and Fidelity Municipal go up and down completely randomly.

Pair Corralation between Barings Emerging and Fidelity Municipal

If you would invest  1,009  in Fidelity Municipal Income on October 10, 2024 and sell it today you would earn a total of  0.00  from holding Fidelity Municipal Income or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

Barings Emerging Markets  vs.  Fidelity Municipal Income

Barings Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barings Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Barings Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Municipal Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Municipal Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Fidelity Municipal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Barings Emerging and Fidelity Municipal

The main advantage of trading using opposite Barings Emerging and Fidelity Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Emerging 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 Barings Emerging Markets 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.