Correlation Between Fidelity Arizona and Ab Ohio

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Can any of the company-specific risk be diversified away by investing in both Fidelity Arizona and Ab Ohio 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 Arizona and Ab Ohio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Arizona Municipal and Ab Ohio Portfolio, you can compare the effects of market volatilities on Fidelity Arizona and Ab Ohio 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 Arizona with a short position of Ab Ohio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Arizona and Ab Ohio.

Diversification Opportunities for Fidelity Arizona and Ab Ohio

0.71
  Correlation Coefficient

Poor diversification

The 3 months correlation between Fidelity and AOHCX is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Arizona Municipal and Ab Ohio Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Ohio Portfolio and Fidelity Arizona 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 Arizona Municipal are associated (or correlated) with Ab Ohio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Ohio Portfolio has no effect on the direction of Fidelity Arizona i.e., Fidelity Arizona and Ab Ohio go up and down completely randomly.

Pair Corralation between Fidelity Arizona and Ab Ohio

Assuming the 90 days horizon Fidelity Arizona Municipal is expected to generate 0.95 times more return on investment than Ab Ohio. However, Fidelity Arizona Municipal is 1.05 times less risky than Ab Ohio. It trades about 0.05 of its potential returns per unit of risk. Ab Ohio Portfolio is currently generating about 0.03 per unit of risk. If you would invest  1,092  in Fidelity Arizona Municipal on October 9, 2024 and sell it today you would earn a total of  54.00  from holding Fidelity Arizona Municipal or generate 4.95% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Fidelity Arizona Municipal  vs.  Ab Ohio Portfolio

 Performance 
       Timeline  
Fidelity Arizona Mun 

Risk-Adjusted Performance

0 of 100

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

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Ab Ohio Portfolio has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Ab Ohio is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Arizona and Ab Ohio Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fidelity Arizona and Ab Ohio

The main advantage of trading using opposite Fidelity Arizona and Ab Ohio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Arizona position performs unexpectedly, Ab Ohio 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 Ab Ohio will offset losses from the drop in Ab Ohio's long position.
The idea behind Fidelity Arizona Municipal and Ab Ohio Portfolio 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

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