Correlation Between Fidelity China and Vanguard Institutional
Can any of the company-specific risk be diversified away by investing in both Fidelity China and Vanguard Institutional 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 China and Vanguard Institutional into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity China Region and Vanguard Institutional Index, you can compare the effects of market volatilities on Fidelity China and Vanguard Institutional 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 China with a short position of Vanguard Institutional. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity China and Vanguard Institutional.
Diversification Opportunities for Fidelity China and Vanguard Institutional
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fidelity and Vanguard is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity China Region and Vanguard Institutional Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Institutional and Fidelity China 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 China Region are associated (or correlated) with Vanguard Institutional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Institutional has no effect on the direction of Fidelity China i.e., Fidelity China and Vanguard Institutional go up and down completely randomly.
Pair Corralation between Fidelity China and Vanguard Institutional
Assuming the 90 days horizon Fidelity China Region is expected to under-perform the Vanguard Institutional. In addition to that, Fidelity China is 1.67 times more volatile than Vanguard Institutional Index. It trades about -0.19 of its total potential returns per unit of risk. Vanguard Institutional Index is currently generating about 0.16 per unit of volatility. If you would invest 48,028 in Vanguard Institutional Index on August 30, 2024 and sell it today you would earn a total of 1,430 from holding Vanguard Institutional Index or generate 2.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity China Region vs. Vanguard Institutional Index
Performance |
| Timeline |
| Fidelity China Region |
| Vanguard Institutional |
Fidelity China and Vanguard Institutional Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity China and Vanguard Institutional
The main advantage of trading using opposite Fidelity China and Vanguard Institutional positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity China position performs unexpectedly, Vanguard Institutional 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 Institutional will offset losses from the drop in Vanguard Institutional's long position.| Fidelity China vs. Fidelity Emerging Asia | Fidelity China vs. Fidelity Emerging Markets | Fidelity China vs. Fidelity Canada Fund | Fidelity China vs. Fidelity Pacific Basin |
| Vanguard Institutional vs. Vanguard Extended Market | Vanguard Institutional vs. Vanguard Total Bond | Vanguard Institutional vs. Vanguard Total Bond | Vanguard Institutional vs. Vanguard Extended Market |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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