Correlation Between Fidelity Low-priced and Vanguard Explorer
Can any of the company-specific risk be diversified away by investing in both Fidelity Low-priced and Vanguard Explorer 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 Low-priced and Vanguard Explorer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Low Priced Stock and Vanguard Explorer Fund, you can compare the effects of market volatilities on Fidelity Low-priced and Vanguard Explorer 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 Low-priced with a short position of Vanguard Explorer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Low-priced and Vanguard Explorer.
Diversification Opportunities for Fidelity Low-priced and Vanguard Explorer
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Vanguard is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Low Priced Stock and Vanguard Explorer Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Explorer and Fidelity Low-priced 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 Low Priced Stock are associated (or correlated) with Vanguard Explorer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Explorer has no effect on the direction of Fidelity Low-priced i.e., Fidelity Low-priced and Vanguard Explorer go up and down completely randomly.
Pair Corralation between Fidelity Low-priced and Vanguard Explorer
Assuming the 90 days horizon Fidelity Low Priced Stock is expected to generate 0.7 times more return on investment than Vanguard Explorer. However, Fidelity Low Priced Stock is 1.43 times less risky than Vanguard Explorer. It trades about -0.21 of its potential returns per unit of risk. Vanguard Explorer Fund is currently generating about -0.36 per unit of risk. If you would invest 4,228 in Fidelity Low Priced Stock on December 1, 2024 and sell it today you would lose (124.00) from holding Fidelity Low Priced Stock or give up 2.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Low Priced Stock vs. Vanguard Explorer Fund
Performance |
| Timeline |
| Fidelity Low Priced |
| Vanguard Explorer |
Fidelity Low-priced and Vanguard Explorer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Low-priced and Vanguard Explorer
The main advantage of trading using opposite Fidelity Low-priced and Vanguard Explorer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Low-priced position performs unexpectedly, Vanguard Explorer 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 Explorer will offset losses from the drop in Vanguard Explorer's long position.| Fidelity Low-priced vs. John Hancock Variable | Fidelity Low-priced vs. Profunds Large Cap Growth | Fidelity Low-priced vs. Blackrock Large Cap | Fidelity Low-priced vs. Calvert Large Cap |
| Vanguard Explorer vs. Vanguard International Growth | Vanguard Explorer vs. Vanguard Windsor Ii | Vanguard Explorer vs. Vanguard Primecap Fund | Vanguard Explorer vs. Vanguard Growth 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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