Correlation Between Fidelity Maryland and Fidelity Arizona

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

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

Diversification Opportunities for Fidelity Maryland and Fidelity Arizona

0.98

Correlation Coefficient

Fidelity Maryland  Fidelity Arizona

Almost no diversification

The 3 months correlation between Fidelity and Fidelity is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Maryland Municipal and Fidelity Arizona Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Arizona Mun and Fidelity Maryland 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 Maryland Municipal are associated (or correlated) with Fidelity Arizona. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Arizona Mun has no effect on the direction of Fidelity Maryland i.e., Fidelity Maryland and Fidelity Arizona go up and down completely randomly.

Pair Corralation between Fidelity Maryland and Fidelity Arizona

Assuming the 90 days horizon Fidelity Maryland Municipal is expected to generate 1.13 times more return on investment than Fidelity Arizona. However, Fidelity Maryland is 1.13 times more volatile than Fidelity Arizona Municipal. It trades about 0.07 of its potential returns per unit of risk. Fidelity Arizona Municipal is currently generating about 0.07 per unit of risk. If you would invest  1,077  in Fidelity Maryland Municipal on September 2, 2024 and sell it today you would earn a total of  12.00  from holding Fidelity Maryland Municipal or generate 1.11% return on investment over 90 days.

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

Fidelity Maryland Municipal  vs.  Fidelity Arizona Municipal

Fidelity Maryland

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Maryland Municipal are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Fidelity Maryland is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Arizona Mun

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Arizona Municipal are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. 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.

Pair Trading with Fidelity Maryland and Fidelity Arizona

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

The idea behind Fidelity Maryland Municipal and Fidelity Arizona 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.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.