Correlation Between Fidelity Contrafund and Vaughan Nelson
Can any of the company-specific risk be diversified away by investing in both Fidelity Contrafund and Vaughan Nelson 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 Contrafund and Vaughan Nelson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Contrafund K6 and Vaughan Nelson International, you can compare the effects of market volatilities on Fidelity Contrafund and Vaughan Nelson 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 Contrafund with a short position of Vaughan Nelson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Contrafund and Vaughan Nelson.
Diversification Opportunities for Fidelity Contrafund and Vaughan Nelson
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fidelity and Vaughan is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Contrafund K6 and Vaughan Nelson International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vaughan Nelson Inter and Fidelity Contrafund 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 Contrafund K6 are associated (or correlated) with Vaughan Nelson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vaughan Nelson Inter has no effect on the direction of Fidelity Contrafund i.e., Fidelity Contrafund and Vaughan Nelson go up and down completely randomly.
Pair Corralation between Fidelity Contrafund and Vaughan Nelson
Assuming the 90 days horizon Fidelity Contrafund K6 is expected to generate 0.92 times more return on investment than Vaughan Nelson. However, Fidelity Contrafund K6 is 1.08 times less risky than Vaughan Nelson. It trades about 0.15 of its potential returns per unit of risk. Vaughan Nelson International is currently generating about 0.1 per unit of risk. If you would invest 3,163 in Fidelity Contrafund K6 on September 12, 2024 and sell it today you would earn a total of 77.00 from holding Fidelity Contrafund K6 or generate 2.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Contrafund K6 vs. Vaughan Nelson International
Performance |
| Timeline |
| Fidelity Contrafund |
| Vaughan Nelson Inter |
Fidelity Contrafund and Vaughan Nelson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Contrafund and Vaughan Nelson
The main advantage of trading using opposite Fidelity Contrafund and Vaughan Nelson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Contrafund position performs unexpectedly, Vaughan Nelson 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 Vaughan Nelson will offset losses from the drop in Vaughan Nelson's long position.| Fidelity Contrafund vs. Lord Abbett Short | Fidelity Contrafund vs. Rbc Short Duration | Fidelity Contrafund vs. Aqr Long Short Equity | Fidelity Contrafund vs. Delaware Investments Ultrashort |
| Vaughan Nelson vs. Needham Aggressive Growth | Vaughan Nelson vs. Ab Global Risk | Vaughan Nelson vs. Us High Relative | Vaughan Nelson vs. Artisan High Income |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |