Correlation Between Fidelity Asset and Vanguard Developed
Can any of the company-specific risk be diversified away by investing in both Fidelity Asset and Vanguard Developed 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 Asset and Vanguard Developed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Asset Manager and Vanguard Developed Markets, you can compare the effects of market volatilities on Fidelity Asset and Vanguard Developed 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 Asset with a short position of Vanguard Developed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Asset and Vanguard Developed.
Diversification Opportunities for Fidelity Asset and Vanguard Developed
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fidelity and VANGUARD is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Asset Manager and Vanguard Developed Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Developed and Fidelity Asset 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 Asset Manager are associated (or correlated) with Vanguard Developed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Developed has no effect on the direction of Fidelity Asset i.e., Fidelity Asset and Vanguard Developed go up and down completely randomly.
Pair Corralation between Fidelity Asset and Vanguard Developed
Assuming the 90 days horizon Fidelity Asset Manager is expected to generate 0.32 times more return on investment than Vanguard Developed. However, Fidelity Asset Manager is 3.12 times less risky than Vanguard Developed. It trades about 0.34 of its potential returns per unit of risk. Vanguard Developed Markets is currently generating about 0.01 per unit of risk. If you would invest 1,363 in Fidelity Asset Manager on September 2, 2024 and sell it today you would earn a total of 25.00 from holding Fidelity Asset Manager or generate 1.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Asset Manager vs. Vanguard Developed Markets
Performance |
| Timeline |
| Fidelity Asset Manager |
| Vanguard Developed |
Fidelity Asset and Vanguard Developed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Asset and Vanguard Developed
The main advantage of trading using opposite Fidelity Asset and Vanguard Developed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Asset position performs unexpectedly, Vanguard Developed 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 Developed will offset losses from the drop in Vanguard Developed's long position.| Fidelity Asset vs. The Hartford Small | Fidelity Asset vs. Kinetics Small Cap | Fidelity Asset vs. Vanguard Small Cap Growth | Fidelity Asset vs. Fisher Small Cap |
| Vanguard Developed vs. Vanguard Emerging Markets | Vanguard Developed vs. Vanguard Small Cap Index | Vanguard Developed vs. Vanguard Total Bond | Vanguard Developed vs. Vanguard Mid Cap Index |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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