Correlation Between Fidelity California and Pioneer Amt-free

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

By analyzing existing cross correlation between Fidelity California Municipal and Pioneer Amt Free Municipal, you can compare the effects of market volatilities on Fidelity California and Pioneer Amt-free 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 California with a short position of Pioneer Amt-free. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity California and Pioneer Amt-free.

Diversification Opportunities for Fidelity California and Pioneer Amt-free

0.99

Correlation Coefficient

Fidelity California  Pioneer Amt-free

No risk reduction

The 3 months correlation between Fidelity and Pioneer is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity California Municipal and Pioneer Amt Free Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneer Amt Free and Fidelity California 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 California Municipal are associated (or correlated) with Pioneer Amt-free. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneer Amt Free has no effect on the direction of Fidelity California i.e., Fidelity California and Pioneer Amt-free go up and down completely randomly.

Pair Corralation between Fidelity California and Pioneer Amt-free

Assuming the 90 days horizon Fidelity California Municipal is expected to generate 0.59 times more return on investment than Pioneer Amt-free. However, Fidelity California Municipal is 1.7 times less risky than Pioneer Amt-free. It trades about -0.05 of its potential returns per unit of risk. Pioneer Amt Free Municipal is currently generating about -0.04 per unit of risk. If you would invest  1,227  in Fidelity California Municipal on October 24, 2024 and sell it today you would lose (14.00) from holding Fidelity California Municipal or give up 1.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Fidelity California Municipal  vs.  Pioneer Amt Free Municipal

Fidelity California

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity California Municipal are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fidelity California is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pioneer Amt Free

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pioneer Amt Free Municipal are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Pioneer Amt-free is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fidelity California and Pioneer Amt-free

The main advantage of trading using opposite Fidelity California and Pioneer Amt-free positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity California position performs unexpectedly, Pioneer Amt-free 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 Pioneer Amt-free will offset losses from the drop in Pioneer Amt-free's long position.

The idea behind Fidelity California Municipal and Pioneer Amt Free Municipal 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.