Correlation Between College Retirement and Fidelity Intermediate

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

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

Diversification Opportunities for College Retirement and Fidelity Intermediate

0.46

Correlation Coefficient

College Retirement  Fidelity Intermediate

Very weak diversification

The 3 months correlation between College and Fidelity is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding College Retirement Equities and Fidelity Intermediate Municipa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Intermediate and College Retirement 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 College Retirement Equities are associated (or correlated) with Fidelity Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Intermediate has no effect on the direction of College Retirement i.e., College Retirement and Fidelity Intermediate go up and down completely randomly.

Pair Corralation between College Retirement and Fidelity Intermediate

Assuming the 90 days trading horizon College Retirement Equities is expected to under-perform the Fidelity Intermediate. In addition to that, College Retirement is 5.18 times more volatile than Fidelity Intermediate Municipal. It trades about -0.22 of its total potential returns per unit of risk. Fidelity Intermediate Municipal is currently generating about -0.31 per unit of volatility. If you would invest  1,015  in Fidelity Intermediate Municipal on October 15, 2024 and sell it today you would lose (12.00) from holding Fidelity Intermediate Municipal or give up 1.18% of portfolio value over 90 days.

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

College Retirement Equities  vs.  Fidelity Intermediate Municipa

College Retirement

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in College Retirement Equities are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, College Retirement is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Intermediate

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with College Retirement and Fidelity Intermediate

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

The idea behind College Retirement Equities and Fidelity Intermediate 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.