Correlation Between Fidelity Municipal and Banking Portfolio
Can any of the company-specific risk be diversified away by investing in both Fidelity Municipal and Banking Portfolio 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 Municipal and Banking Portfolio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Municipal Income and Banking Portfolio Banking, you can compare the effects of market volatilities on Fidelity Municipal and Banking Portfolio 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 Municipal with a short position of Banking Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Municipal and Banking Portfolio.
Diversification Opportunities for Fidelity Municipal and Banking Portfolio
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Banking is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Municipal Income and Banking Portfolio Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banking Portfolio Banking and Fidelity Municipal 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 Municipal Income are associated (or correlated) with Banking Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banking Portfolio Banking has no effect on the direction of Fidelity Municipal i.e., Fidelity Municipal and Banking Portfolio go up and down completely randomly.
Pair Corralation between Fidelity Municipal and Banking Portfolio
Assuming the 90 days horizon Fidelity Municipal Income is expected to generate 0.2 times more return on investment than Banking Portfolio. However, Fidelity Municipal Income is 5.11 times less risky than Banking Portfolio. It trades about -0.03 of its potential returns per unit of risk. Banking Portfolio Banking is currently generating about -0.11 per unit of risk. If you would invest 1,233 in Fidelity Municipal Income on November 28, 2024 and sell it today you would lose (6.00) from holding Fidelity Municipal Income or give up 0.49% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Fidelity Municipal Income vs. Banking Portfolio Banking
Performance |
Timeline |
Fidelity Municipal Income |
Banking Portfolio Banking |
Fidelity Municipal and Banking Portfolio Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fidelity Municipal and Banking Portfolio
The main advantage of trading using opposite Fidelity Municipal and Banking Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Municipal position performs unexpectedly, Banking Portfolio 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 Banking Portfolio will offset losses from the drop in Banking Portfolio's long position.Fidelity Municipal vs. Franklin Government Money | Fidelity Municipal vs. Prudential Emerging Markets | Fidelity Municipal vs. Voya Government Money | Fidelity Municipal vs. Transamerica Funds |
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Check out your portfolio center.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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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