Correlation Between Vanguard Canadian and Fidelity International
Can any of the company-specific risk be diversified away by investing in both Vanguard Canadian and Fidelity International 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 Vanguard Canadian and Fidelity International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Canadian Aggregate and Fidelity International High, you can compare the effects of market volatilities on Vanguard Canadian and Fidelity International 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 Vanguard Canadian with a short position of Fidelity International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Canadian and Fidelity International.
Diversification Opportunities for Vanguard Canadian and Fidelity International
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Vanguard and Fidelity is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Canadian Aggregate and Fidelity International High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity International and Vanguard Canadian 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 Vanguard Canadian Aggregate are associated (or correlated) with Fidelity International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity International has no effect on the direction of Vanguard Canadian i.e., Vanguard Canadian and Fidelity International go up and down completely randomly.
Pair Corralation between Vanguard Canadian and Fidelity International
Assuming the 90 days trading horizon Vanguard Canadian is expected to generate 1.45 times less return on investment than Fidelity International. But when comparing it to its historical volatility, Vanguard Canadian Aggregate is 1.88 times less risky than Fidelity International. It trades about 0.09 of its potential returns per unit of risk. Fidelity International High is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,485 in Fidelity International High on September 1, 2024 and sell it today you would earn a total of 212.00 from holding Fidelity International High or generate 8.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Vanguard Canadian Aggregate vs. Fidelity International High
Performance |
| Timeline |
| Vanguard Canadian |
| Fidelity International |
Vanguard Canadian and Fidelity International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Canadian and Fidelity International
The main advantage of trading using opposite Vanguard Canadian and Fidelity International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Canadian position performs unexpectedly, Fidelity International 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 Fidelity International will offset losses from the drop in Fidelity International's long position.| Vanguard Canadian vs. Vanguard Canadian Short | Vanguard Canadian vs. Vanguard FTSE Canada | Vanguard Canadian vs. Vanguard FTSE Global | Vanguard Canadian vs. Vanguard FTSE Emerging |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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