Correlation Between Fidelity Europe and Vanguard Pacific
Can any of the company-specific risk be diversified away by investing in both Fidelity Europe and Vanguard Pacific 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 Pacific 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 Pacific Stock, you can compare the effects of market volatilities on Fidelity Europe and Vanguard Pacific 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 Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Europe and Vanguard Pacific.
Diversification Opportunities for Fidelity Europe and Vanguard Pacific
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Vanguard is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Europe Fund and Vanguard Pacific Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Pacific 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 Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Pacific Stock has no effect on the direction of Fidelity Europe i.e., Fidelity Europe and Vanguard Pacific go up and down completely randomly.
Pair Corralation between Fidelity Europe and Vanguard Pacific
Assuming the 90 days horizon Fidelity Europe Fund is expected to generate 0.92 times more return on investment than Vanguard Pacific. However, Fidelity Europe Fund is 1.09 times less risky than Vanguard Pacific. It trades about 0.09 of its potential returns per unit of risk. Vanguard Pacific Stock is currently generating about -0.03 per unit of risk. If you would invest 3,667 in Fidelity Europe Fund on September 12, 2024 and sell it today you would earn a total of 49.00 from holding Fidelity Europe Fund or generate 1.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Europe Fund vs. Vanguard Pacific Stock
Performance |
| Timeline |
| Fidelity Europe |
| Vanguard Pacific Stock |
Fidelity Europe and Vanguard Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Europe and Vanguard Pacific
The main advantage of trading using opposite Fidelity Europe and Vanguard Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Europe position performs unexpectedly, Vanguard Pacific 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 Pacific will offset losses from the drop in Vanguard Pacific's long position.| Fidelity Europe vs. Invesco Asia Pacific | Fidelity Europe vs. Invesco European Small | Fidelity Europe vs. Invesco Developing Markets | Fidelity Europe vs. Aquagold International |
| Vanguard Pacific vs. Fidelity Europe Fund | Vanguard Pacific vs. Fidelity Japan Fund | Vanguard Pacific vs. Fidelity Emerging Asia | Vanguard Pacific vs. Fidelity Nordic Fund |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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