Correlation Between Vanguard Consumer and Fidelity Metaverse
Can any of the company-specific risk be diversified away by investing in both Vanguard Consumer and Fidelity Metaverse 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 Consumer and Fidelity Metaverse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Consumer Discretionary and Fidelity Metaverse ETF, you can compare the effects of market volatilities on Vanguard Consumer and Fidelity Metaverse 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 Consumer with a short position of Fidelity Metaverse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Consumer and Fidelity Metaverse.
Diversification Opportunities for Vanguard Consumer and Fidelity Metaverse
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Fidelity is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Consumer Discretionar and Fidelity Metaverse ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Metaverse ETF and Vanguard Consumer 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 Consumer Discretionary are associated (or correlated) with Fidelity Metaverse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Metaverse ETF has no effect on the direction of Vanguard Consumer i.e., Vanguard Consumer and Fidelity Metaverse go up and down completely randomly.
Pair Corralation between Vanguard Consumer and Fidelity Metaverse
Considering the 90-day investment horizon Vanguard Consumer Discretionary is expected to generate 0.98 times more return on investment than Fidelity Metaverse. However, Vanguard Consumer Discretionary is 1.02 times less risky than Fidelity Metaverse. It trades about 0.35 of its potential returns per unit of risk. Fidelity Metaverse ETF is currently generating about -0.02 per unit of risk. If you would invest 33,884 in Vanguard Consumer Discretionary on August 30, 2024 and sell it today you would earn a total of 3,367 from holding Vanguard Consumer Discretionary or generate 9.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Consumer Discretionar vs. Fidelity Metaverse ETF
Performance |
| Timeline |
| Vanguard Consumer |
| Fidelity Metaverse ETF |
Vanguard Consumer and Fidelity Metaverse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Consumer and Fidelity Metaverse
The main advantage of trading using opposite Vanguard Consumer and Fidelity Metaverse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Consumer position performs unexpectedly, Fidelity Metaverse 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 Metaverse will offset losses from the drop in Fidelity Metaverse's long position.| Vanguard Consumer vs. Vanguard Consumer Staples | Vanguard Consumer vs. Vanguard Industrials Index | Vanguard Consumer vs. Vanguard Communication Services | Vanguard Consumer vs. Vanguard Materials Index |
| Fidelity Metaverse vs. Fidelity Crypto Industry | Fidelity Metaverse vs. Fidelity Covington Trust | Fidelity Metaverse vs. ProShares Metaverse ETF | Fidelity Metaverse vs. Fidelity Covington Trust |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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