Correlation Between Fidelity Ohio and Fidelity Maryland

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

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

Diversification Opportunities for Fidelity Ohio and Fidelity Maryland

0.97

Correlation Coefficient

Fidelity Ohio  Fidelity Maryland

Almost no diversification

The 3 months correlation between Fidelity and Fidelity is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Ohio Municipal and Fidelity Maryland Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Maryland and Fidelity Ohio 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 Ohio Municipal are associated (or correlated) with Fidelity Maryland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Maryland has no effect on the direction of Fidelity Ohio i.e., Fidelity Ohio and Fidelity Maryland go up and down completely randomly.

Pair Corralation between Fidelity Ohio and Fidelity Maryland

Assuming the 90 days horizon Fidelity Ohio is expected to generate 1.06 times less return on investment than Fidelity Maryland. But when comparing it to its historical volatility, Fidelity Ohio Municipal is 1.19 times less risky than Fidelity Maryland. It trades about 0.06 of its potential returns per unit of risk. Fidelity Maryland Municipal is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,077  in Fidelity Maryland Municipal on August 31, 2024 and sell it today you would earn a total of  9.00  from holding Fidelity Maryland Municipal or generate 0.84% return on investment over 90 days.

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

Fidelity Ohio Municipal  vs.  Fidelity Maryland Municipal

Fidelity Ohio Municipal

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Ohio Municipal are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Fidelity Ohio is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Maryland

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Maryland Municipal are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Fidelity Maryland 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 Ohio and Fidelity Maryland

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

The idea behind Fidelity Ohio Municipal and Fidelity Maryland 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.