Correlation Between Vanguard California and Fidelity Series
Can any of the company-specific risk be diversified away by investing in both Vanguard California and Fidelity Series 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 California and Fidelity Series into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard California Long Term and Fidelity Series Floating, you can compare the effects of market volatilities on Vanguard California and Fidelity Series 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 California with a short position of Fidelity Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard California and Fidelity Series.
Diversification Opportunities for Vanguard California and Fidelity Series
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between VANGUARD and Fidelity is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard California Long Term and Fidelity Series Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Series Floating and Vanguard California 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 California Long Term are associated (or correlated) with Fidelity Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Series Floating has no effect on the direction of Vanguard California i.e., Vanguard California and Fidelity Series go up and down completely randomly.
Pair Corralation between Vanguard California and Fidelity Series
Assuming the 90 days horizon Vanguard California is expected to generate 2.16 times less return on investment than Fidelity Series. In addition to that, Vanguard California is 1.42 times more volatile than Fidelity Series Floating. It trades about 0.07 of its total potential returns per unit of risk. Fidelity Series Floating is currently generating about 0.22 per unit of volatility. If you would invest 735.00 in Fidelity Series Floating on September 5, 2024 and sell it today you would earn a total of 170.00 from holding Fidelity Series Floating or generate 23.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Vanguard California Long Term vs. Fidelity Series Floating
Performance |
| Timeline |
| Vanguard California |
| Fidelity Series Floating |
Vanguard California and Fidelity Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard California and Fidelity Series
The main advantage of trading using opposite Vanguard California and Fidelity Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard California position performs unexpectedly, Fidelity Series 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 Series will offset losses from the drop in Fidelity Series' long position.The idea behind Vanguard California Long Term and Fidelity Series Floating pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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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