Correlation Between Fidelity Pennsylvania and Fidelity Blue

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

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

Diversification Opportunities for Fidelity Pennsylvania and Fidelity Blue

0.02

Correlation Coefficient

Fidelity Pennsylvania  Fidelity Blue

Significant diversification

The 3 months correlation between Fidelity and Fidelity is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Pennsylvania Municipa and Fidelity Blue Chip in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Blue Chip and Fidelity Pennsylvania 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 Pennsylvania Municipal are associated (or correlated) with Fidelity Blue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Blue Chip has no effect on the direction of Fidelity Pennsylvania i.e., Fidelity Pennsylvania and Fidelity Blue go up and down completely randomly.

Pair Corralation between Fidelity Pennsylvania and Fidelity Blue

Assuming the 90 days horizon Fidelity Pennsylvania Municipal is expected to under-perform the Fidelity Blue. But the mutual fund apears to be less risky and, when comparing its historical volatility, Fidelity Pennsylvania Municipal is 5.78 times less risky than Fidelity Blue. The mutual fund trades about -0.41 of its potential returns per unit of risk. The Fidelity Blue Chip is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  22,678  in Fidelity Blue Chip on October 1, 2024 and sell it today you would earn a total of  504.00  from holding Fidelity Blue Chip or generate 2.22% return on investment over 90 days.

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

Fidelity Pennsylvania Municipa  vs.  Fidelity Blue Chip

Fidelity Pennsylvania

Risk-Adjusted Performance

0 of 100

Very Weak

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

Fidelity Blue Chip

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Blue Chip are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Fidelity Blue showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fidelity Pennsylvania and Fidelity Blue

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

The idea behind Fidelity Pennsylvania Municipal and Fidelity Blue Chip 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.