Correlation Between Fidelity Small and Vanguard Small
Can any of the company-specific risk be diversified away by investing in both Fidelity Small and Vanguard Small 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 Small and Vanguard Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Small Cap and Vanguard Small Cap Value, you can compare the effects of market volatilities on Fidelity Small and Vanguard Small 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 Small with a short position of Vanguard Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Small and Vanguard Small.
Diversification Opportunities for Fidelity Small and Vanguard Small
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Vanguard is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Small Cap and Vanguard Small Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Small Cap and Fidelity 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 Fidelity Small Cap are associated (or correlated) with Vanguard Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Small Cap has no effect on the direction of Fidelity Small i.e., Fidelity Small and Vanguard Small go up and down completely randomly.
Pair Corralation between Fidelity Small and Vanguard Small
Assuming the 90 days horizon Fidelity Small Cap is expected to generate 1.28 times more return on investment than Vanguard Small. However, Fidelity Small is 1.28 times more volatile than Vanguard Small Cap Value. It trades about 0.26 of its potential returns per unit of risk. Vanguard Small Cap Value is currently generating about 0.32 per unit of risk. If you would invest 1,872 in Fidelity Small Cap on September 4, 2024 and sell it today you would earn a total of 168.00 from holding Fidelity Small Cap or generate 8.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Fidelity Small Cap vs. Vanguard Small Cap Value
Performance |
| Timeline |
| Fidelity Small Cap |
| Vanguard Small Cap |
Fidelity Small and Vanguard Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Small and Vanguard Small
The main advantage of trading using opposite Fidelity Small and Vanguard Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Small position performs unexpectedly, Vanguard Small 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 Small will offset losses from the drop in Vanguard Small's long position.| Fidelity Small vs. Fidelity Freedom 2015 | Fidelity Small vs. Fidelity Puritan Fund | Fidelity Small vs. Fidelity Puritan Fund | Fidelity Small vs. Fidelity Pennsylvania Municipal |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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