Correlation Between Vanguard Small and Fidelity Sustainable
Can any of the company-specific risk be diversified away by investing in both Vanguard Small and Fidelity Sustainable 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 Small and Fidelity Sustainable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Small Cap Index and Fidelity Sustainable High, you can compare the effects of market volatilities on Vanguard Small and Fidelity Sustainable 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 Small with a short position of Fidelity Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small and Fidelity Sustainable.
Diversification Opportunities for Vanguard Small and Fidelity Sustainable
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Fidelity is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Index and Fidelity Sustainable High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Sustainable High and Vanguard Small 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 Small Cap Index are associated (or correlated) with Fidelity Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Sustainable High has no effect on the direction of Vanguard Small i.e., Vanguard Small and Fidelity Sustainable go up and down completely randomly.
Pair Corralation between Vanguard Small and Fidelity Sustainable
Allowing for the 90-day total investment horizon Vanguard Small Cap Index is expected to generate 5.85 times more return on investment than Fidelity Sustainable. However, Vanguard Small is 5.85 times more volatile than Fidelity Sustainable High. It trades about 0.4 of its potential returns per unit of risk. Fidelity Sustainable High is currently generating about 0.29 per unit of risk. If you would invest 23,564 in Vanguard Small Cap Index on September 1, 2024 and sell it today you would earn a total of 2,487 from holding Vanguard Small Cap Index or generate 10.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Vanguard Small Cap Index vs. Fidelity Sustainable High
Performance |
| Timeline |
| Vanguard Small Cap |
| Fidelity Sustainable High |
Vanguard Small and Fidelity Sustainable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small and Fidelity Sustainable
The main advantage of trading using opposite Vanguard Small and Fidelity Sustainable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small position performs unexpectedly, Fidelity Sustainable 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 Sustainable will offset losses from the drop in Fidelity Sustainable's long position.| Vanguard Small vs. Vanguard Mid Cap Index | Vanguard Small vs. Vanguard Small Cap Value | Vanguard Small vs. Vanguard FTSE Emerging | Vanguard Small vs. Vanguard Large Cap Index |
| Fidelity Sustainable vs. Fidelity Preferred Securities | Fidelity Sustainable vs. Fidelity Investment Grade | Fidelity Sustainable vs. Fidelity Investment Grade | Fidelity Sustainable vs. Fidelity High Yield |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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