Correlation Between Fidelity Government and Vanguard Intermediate
Can any of the company-specific risk be diversified away by investing in both Fidelity Government and Vanguard Intermediate 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 Government and Vanguard Intermediate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Government Income and Vanguard Intermediate Term Government, you can compare the effects of market volatilities on Fidelity Government and Vanguard Intermediate 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 Government with a short position of Vanguard Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Government and Vanguard Intermediate.
Diversification Opportunities for Fidelity Government and Vanguard Intermediate
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 Government Income and Vanguard Intermediate Term Gov in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Intermediate and Fidelity Government 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 Government Income are associated (or correlated) with Vanguard Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Intermediate has no effect on the direction of Fidelity Government i.e., Fidelity Government and Vanguard Intermediate go up and down completely randomly.
Pair Corralation between Fidelity Government and Vanguard Intermediate
Assuming the 90 days horizon Fidelity Government is expected to generate 1.22 times less return on investment than Vanguard Intermediate. In addition to that, Fidelity Government is 1.16 times more volatile than Vanguard Intermediate Term Government. It trades about 0.02 of its total potential returns per unit of risk. Vanguard Intermediate Term Government is currently generating about 0.03 per unit of volatility. If you would invest 1,897 in Vanguard Intermediate Term Government on September 4, 2024 and sell it today you would earn a total of 90.00 from holding Vanguard Intermediate Term Government or generate 4.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Government Income vs. Vanguard Intermediate Term Gov
Performance |
| Timeline |
| Fidelity Government |
| Vanguard Intermediate |
Fidelity Government and Vanguard Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Government and Vanguard Intermediate
The main advantage of trading using opposite Fidelity Government and Vanguard Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Government position performs unexpectedly, Vanguard Intermediate 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 Intermediate will offset losses from the drop in Vanguard Intermediate's long position.| Fidelity Government vs. Goldman Sachs Clean | Fidelity Government vs. Europac Gold Fund | Fidelity Government vs. Fidelity Advisor Gold | Fidelity Government vs. International Investors Gold |
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 Stocks Directory module to find actively traded stocks across global markets.
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