Correlation Between Fidelity Intermediate and Bridge Builder

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

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

Diversification Opportunities for Fidelity Intermediate and Bridge Builder

0.99

Correlation Coefficient

Fidelity Intermediate  Bridge Builder

No risk reduction

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

Pair Corralation between Fidelity Intermediate and Bridge Builder

Assuming the 90 days horizon Fidelity Intermediate Municipal is expected to generate 0.95 times more return on investment than Bridge Builder. However, Fidelity Intermediate Municipal is 1.06 times less risky than Bridge Builder. It trades about -0.02 of its potential returns per unit of risk. Bridge Builder Municipal is currently generating about -0.03 per unit of risk. If you would invest  998.00  in Fidelity Intermediate Municipal on December 29, 2024 and sell it today you would lose (2.00) from holding Fidelity Intermediate Municipal or give up 0.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

Fidelity Intermediate Municipa  vs.  Bridge Builder Municipal

Fidelity Intermediate

Risk-Adjusted Performance

Very Weak

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

Bridge Builder Municipal

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bridge Builder Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Bridge Builder 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 Intermediate and Bridge Builder

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

The idea behind Fidelity Intermediate Municipal and Bridge Builder 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.