Correlation Between Fidelity California and Vanguard California
Can any of the company-specific risk be diversified away by investing in both Fidelity California and Vanguard California 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 California and Vanguard California into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity California Municipal and Vanguard California Intermediate Term, you can compare the effects of market volatilities on Fidelity California and Vanguard California 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 California with a short position of Vanguard California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity California and Vanguard California.
Diversification Opportunities for Fidelity California and Vanguard California
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Fidelity and Vanguard is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity California Municipal and Vanguard California Intermedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard California and Fidelity California 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 California Municipal are associated (or correlated) with Vanguard California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard California has no effect on the direction of Fidelity California i.e., Fidelity California and Vanguard California go up and down completely randomly.
Pair Corralation between Fidelity California and Vanguard California
Assuming the 90 days horizon Fidelity California Municipal is expected to generate 1.38 times more return on investment than Vanguard California. However, Fidelity California is 1.38 times more volatile than Vanguard California Intermediate Term. It trades about 0.2 of its potential returns per unit of risk. Vanguard California Intermediate Term is currently generating about 0.24 per unit of risk. If you would invest 1,215 in Fidelity California Municipal on August 31, 2024 and sell it today you would earn a total of 18.00 from holding Fidelity California Municipal or generate 1.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Fidelity California Municipal vs. Vanguard California Intermedia
Performance |
| Timeline |
| Fidelity California |
| Vanguard California |
Fidelity California and Vanguard California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity California and Vanguard California
The main advantage of trading using opposite Fidelity California and Vanguard California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity California position performs unexpectedly, Vanguard California 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 California will offset losses from the drop in Vanguard California's long position.| Fidelity California vs. Franklin California Tax Free | Fidelity California vs. Vanguard California Long Term | Fidelity California vs. Tax Exempt Fund Of | Fidelity California vs. Tax Exempt Fund Of |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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