Correlation Between Fidelity International and Vanguard FTSE
Can any of the company-specific risk be diversified away by investing in both Fidelity International and Vanguard FTSE 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 International and Vanguard FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity International High and Vanguard FTSE Developed, you can compare the effects of market volatilities on Fidelity International and Vanguard FTSE 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 International with a short position of Vanguard FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity International and Vanguard FTSE.
Diversification Opportunities for Fidelity International and Vanguard FTSE
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fidelity and Vanguard is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity International High and Vanguard FTSE Developed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard FTSE Developed and Fidelity International 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 International High are associated (or correlated) with Vanguard FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard FTSE Developed has no effect on the direction of Fidelity International i.e., Fidelity International and Vanguard FTSE go up and down completely randomly.
Pair Corralation between Fidelity International and Vanguard FTSE
Assuming the 90 days trading horizon Fidelity International is expected to generate 1.06 times less return on investment than Vanguard FTSE. But when comparing it to its historical volatility, Fidelity International High is 1.01 times less risky than Vanguard FTSE. It trades about 0.07 of its potential returns per unit of risk. Vanguard FTSE Developed is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,442 in Vanguard FTSE Developed on September 3, 2024 and sell it today you would earn a total of 1,278 from holding Vanguard FTSE Developed or generate 28.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity International High vs. Vanguard FTSE Developed
Performance |
| Timeline |
| Fidelity International |
| Vanguard FTSE Developed |
Fidelity International and Vanguard FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity International and Vanguard FTSE
The main advantage of trading using opposite Fidelity International and Vanguard FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity International position performs unexpectedly, Vanguard FTSE 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 FTSE will offset losses from the drop in Vanguard FTSE's long position.| Fidelity International vs. Fidelity Canadian High | Fidelity International vs. Fidelity High Dividend | Fidelity International vs. Fidelity High Dividend | Fidelity International vs. Fidelity Dividend for |
| Vanguard FTSE vs. Fidelity Canadian High | Vanguard FTSE vs. Fidelity High Dividend | Vanguard FTSE vs. Fidelity High Dividend | Vanguard FTSE vs. Fidelity Dividend for |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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