Correlation Between Scout Small and Fidelity Municipal

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Scout Small and Fidelity Municipal 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 Scout Small and Fidelity Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scout Small Cap and Fidelity Municipal Income, you can compare the effects of market volatilities on Scout Small and Fidelity Municipal 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 Scout Small with a short position of Fidelity Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scout Small and Fidelity Municipal.

Diversification Opportunities for Scout Small and Fidelity Municipal

0.63
  Correlation Coefficient

Poor diversification

The 3 months correlation between Scout and Fidelity is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Scout Small Cap and Fidelity Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Municipal Income and Scout Small 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 Scout Small Cap are associated (or correlated) with Fidelity Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Municipal Income has no effect on the direction of Scout Small i.e., Scout Small and Fidelity Municipal go up and down completely randomly.

Pair Corralation between Scout Small and Fidelity Municipal

Assuming the 90 days horizon Scout Small Cap is expected to under-perform the Fidelity Municipal. In addition to that, Scout Small is 9.29 times more volatile than Fidelity Municipal Income. It trades about -0.19 of its total potential returns per unit of risk. Fidelity Municipal Income is currently generating about -0.29 per unit of volatility. If you would invest  1,230  in Fidelity Municipal Income on October 17, 2024 and sell it today you would lose (21.00) from holding Fidelity Municipal Income or give up 1.71% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Scout Small Cap  vs.  Fidelity Municipal Income

 Performance 
       Timeline  
Scout Small Cap 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Scout Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.
Fidelity Municipal Income 

Risk-Adjusted Performance

0 of 100

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

Scout Small and Fidelity Municipal Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Scout Small and Fidelity Municipal

The main advantage of trading using opposite Scout Small and Fidelity Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scout Small position performs unexpectedly, Fidelity Municipal 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 Municipal will offset losses from the drop in Fidelity Municipal's long position.
The idea behind Scout Small Cap and Fidelity Municipal Income 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.
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

Other Complementary Tools

Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
Commodity Directory
Find actively traded commodities issued by global exchanges
Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets