Correlation Between Fidelity Europe and Vanguard European
Can any of the company-specific risk be diversified away by investing in both Fidelity Europe and Vanguard European 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 Europe and Vanguard European into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Europe Fund and Vanguard European Stock, you can compare the effects of market volatilities on Fidelity Europe and Vanguard European 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 Europe with a short position of Vanguard European. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Europe and Vanguard European.
Diversification Opportunities for Fidelity Europe and Vanguard European
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Vanguard is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Europe Fund and Vanguard European Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard European Stock and Fidelity Europe 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 Europe Fund are associated (or correlated) with Vanguard European. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard European Stock has no effect on the direction of Fidelity Europe i.e., Fidelity Europe and Vanguard European go up and down completely randomly.
Pair Corralation between Fidelity Europe and Vanguard European
Assuming the 90 days horizon Fidelity Europe is expected to generate 1.07 times less return on investment than Vanguard European. But when comparing it to its historical volatility, Fidelity Europe Fund is 1.02 times less risky than Vanguard European. It trades about 0.06 of its potential returns per unit of risk. Vanguard European Stock is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,005 in Vanguard European Stock on November 19, 2024 and sell it today you would earn a total of 762.00 from holding Vanguard European Stock or generate 25.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Europe Fund vs. Vanguard European Stock
Performance |
| Timeline |
| Fidelity Europe |
| Vanguard European Stock |
Fidelity Europe and Vanguard European Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Europe and Vanguard European
The main advantage of trading using opposite Fidelity Europe and Vanguard European positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Europe position performs unexpectedly, Vanguard European 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 European will offset losses from the drop in Vanguard European's long position.| Fidelity Europe vs. Franklin Emerging Market | Fidelity Europe vs. Wasatch Frontier Emerging | Fidelity Europe vs. Investec Emerging Markets | Fidelity Europe vs. Vy Jpmorgan Emerging |
| Vanguard European vs. Goldman Sachs Short | Vanguard European vs. Siit High Yield | Vanguard European vs. Doubleline Total Return | Vanguard European vs. Morningstar Defensive Bond |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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