Correlation Between Vanguard Energy and Fidelity MSCI
Can any of the company-specific risk be diversified away by investing in both Vanguard Energy and Fidelity MSCI 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 Energy and Fidelity MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Energy Index and Fidelity MSCI Energy, you can compare the effects of market volatilities on Vanguard Energy and Fidelity MSCI 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 Energy with a short position of Fidelity MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Energy and Fidelity MSCI.
Diversification Opportunities for Vanguard Energy and Fidelity MSCI
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Vanguard and Fidelity is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Energy Index and Fidelity MSCI Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity MSCI Energy and Vanguard Energy 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 Energy Index are associated (or correlated) with Fidelity MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity MSCI Energy has no effect on the direction of Vanguard Energy i.e., Vanguard Energy and Fidelity MSCI go up and down completely randomly.
Pair Corralation between Vanguard Energy and Fidelity MSCI
Considering the 90-day investment horizon Vanguard Energy is expected to generate 1.01 times less return on investment than Fidelity MSCI. But when comparing it to its historical volatility, Vanguard Energy Index is 1.01 times less risky than Fidelity MSCI. It trades about 0.33 of its potential returns per unit of risk. Fidelity MSCI Energy is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 2,414 in Fidelity MSCI Energy on August 30, 2024 and sell it today you would earn a total of 216.00 from holding Fidelity MSCI Energy or generate 8.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Energy Index vs. Fidelity MSCI Energy
Performance |
| Timeline |
| Vanguard Energy Index |
| Fidelity MSCI Energy |
Vanguard Energy and Fidelity MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Energy and Fidelity MSCI
The main advantage of trading using opposite Vanguard Energy and Fidelity MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Energy position performs unexpectedly, Fidelity MSCI 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 MSCI will offset losses from the drop in Fidelity MSCI's long position.| Vanguard Energy vs. Vanguard Financials Index | Vanguard Energy vs. Vanguard Health Care | Vanguard Energy vs. Vanguard Utilities Index | Vanguard Energy vs. Vanguard Materials Index |
| Fidelity MSCI vs. Fidelity MSCI Financials | Fidelity MSCI vs. Fidelity MSCI Utilities | Fidelity MSCI vs. Fidelity MSCI Health | Fidelity MSCI vs. Fidelity MSCI Consumer |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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