Correlation Between Fidelity Short and Vanguard Short-term
Can any of the company-specific risk be diversified away by investing in both Fidelity Short and Vanguard Short-term 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 Short and Vanguard Short-term into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Short Term Treasury and Vanguard Short Term Treasury, you can compare the effects of market volatilities on Fidelity Short and Vanguard Short-term 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 Short with a short position of Vanguard Short-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Short and Vanguard Short-term.
Diversification Opportunities for Fidelity Short and Vanguard Short-term
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Vanguard is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Short Term Treasury and Vanguard Short Term Treasury in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Short Term and Fidelity Short 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 Short Term Treasury are associated (or correlated) with Vanguard Short-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Short Term has no effect on the direction of Fidelity Short i.e., Fidelity Short and Vanguard Short-term go up and down completely randomly.
Pair Corralation between Fidelity Short and Vanguard Short-term
Assuming the 90 days horizon Fidelity Short Term Treasury is expected to generate 0.88 times more return on investment than Vanguard Short-term. However, Fidelity Short Term Treasury is 1.14 times less risky than Vanguard Short-term. It trades about -0.11 of its potential returns per unit of risk. Vanguard Short Term Treasury is currently generating about -0.1 per unit of risk. If you would invest 1,027 in Fidelity Short Term Treasury on August 23, 2024 and sell it today you would lose (3.00) from holding Fidelity Short Term Treasury or give up 0.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Short Term Treasury vs. Vanguard Short Term Treasury
Performance |
| Timeline |
| Fidelity Short Term |
| Vanguard Short Term |
Fidelity Short and Vanguard Short-term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Short and Vanguard Short-term
The main advantage of trading using opposite Fidelity Short and Vanguard Short-term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Short position performs unexpectedly, Vanguard Short-term 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 Short-term will offset losses from the drop in Vanguard Short-term's long position.| Fidelity Short vs. Vanguard Short Term Federal | Fidelity Short vs. Vanguard Short Term Government | Fidelity Short vs. Eaton Vance Short |
| Vanguard Short-term vs. Vanguard Short Term Federal | Vanguard Short-term vs. Vanguard Short Term Government | Vanguard Short-term vs. Fidelity Short Term Treasury | Vanguard Short-term vs. Eaton Vance Short |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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