Correlation Between Gurtin California and Fidelity Govt

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

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

Diversification Opportunities for Gurtin California and Fidelity Govt

0.12

Correlation Coefficient

Gurtin California  Fidelity Govt

Average diversification

The 3 months correlation between Gurtin and Fidelity is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Gurtin California Muni and Fidelity Govt Cash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Govt Cash and Gurtin California 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 Gurtin California Muni are associated (or correlated) with Fidelity Govt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Govt Cash has no effect on the direction of Gurtin California i.e., Gurtin California and Fidelity Govt go up and down completely randomly.

Pair Corralation between Gurtin California and Fidelity Govt

Assuming the 90 days horizon Gurtin California is expected to generate 9.5 times less return on investment than Fidelity Govt. In addition to that, Gurtin California is 1.29 times more volatile than Fidelity Govt Cash. It trades about 0.01 of its total potential returns per unit of risk. Fidelity Govt Cash is currently generating about 0.13 per unit of volatility. If you would invest  99.00  in Fidelity Govt Cash on October 25, 2024 and sell it today you would earn a total of  1.00  from holding Fidelity Govt Cash or generate 1.01% return on investment over 90 days.

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

Gurtin California Muni  vs.  Fidelity Govt Cash

Gurtin California Muni

Risk-Adjusted Performance

0 of 100

Very Weak

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

Fidelity Govt Cash

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Govt Cash are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fidelity Govt is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gurtin California and Fidelity Govt

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

The idea behind Gurtin California Muni and Fidelity Govt Cash 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 Transaction History module to view history of all your transactions and understand their impact on performance.