Correlation Between Fidelity Municipal and Vanguard Long
Can any of the company-specific risk be diversified away by investing in both Fidelity Municipal and Vanguard Long 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 Municipal and Vanguard Long into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Municipal Income and Vanguard Long Term Tax Exempt, you can compare the effects of market volatilities on Fidelity Municipal and Vanguard Long 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 Municipal with a short position of Vanguard Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Municipal and Vanguard Long.
Diversification Opportunities for Fidelity Municipal and Vanguard Long
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Fidelity and Vanguard is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Municipal Income and Vanguard Long Term Tax Exempt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Long Term and Fidelity Municipal 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 Municipal Income are associated (or correlated) with Vanguard Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Long Term has no effect on the direction of Fidelity Municipal i.e., Fidelity Municipal and Vanguard Long go up and down completely randomly.
Pair Corralation between Fidelity Municipal and Vanguard Long
Assuming the 90 days horizon Fidelity Municipal Income is expected to generate 0.99 times more return on investment than Vanguard Long. However, Fidelity Municipal Income is 1.01 times less risky than Vanguard Long. It trades about -0.22 of its potential returns per unit of risk. Vanguard Long Term Tax Exempt is currently generating about -0.24 per unit of risk. If you would invest 1,223 in Fidelity Municipal Income on January 26, 2024 and sell it today you would lose (12.00) from holding Fidelity Municipal Income or give up 0.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Municipal Income vs. Vanguard Long Term Tax Exempt
Performance |
| Timeline |
| Fidelity Municipal |
| Vanguard Long Term |
Fidelity Municipal and Vanguard Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Municipal and Vanguard Long
The main advantage of trading using opposite Fidelity Municipal and Vanguard Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Municipal position performs unexpectedly, Vanguard Long 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 Vanguard Long will offset losses from the drop in Vanguard Long's long position.| Fidelity Municipal vs. Fidelity Freedom 2015 | Fidelity Municipal vs. Fidelity Puritan Fund | Fidelity Municipal vs. Fidelity Pennsylvania Municipal | Fidelity Municipal vs. Fidelity Freedom Index |
| Vanguard Long vs. Vanguard Long Term Tax Exempt | Vanguard Long vs. Vanguard High Yield Tax Exempt | Vanguard Long vs. Strategic Advisers Municipal |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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