Correlation Between Vanguard Emerging and Fidelity Salem
Can any of the company-specific risk be diversified away by investing in both Vanguard Emerging and Fidelity Salem 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 Emerging and Fidelity Salem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Emerging Markets and Fidelity Salem Street, you can compare the effects of market volatilities on Vanguard Emerging and Fidelity Salem 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 Emerging with a short position of Fidelity Salem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Emerging and Fidelity Salem.
Diversification Opportunities for Vanguard Emerging and Fidelity Salem
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Fidelity is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Emerging Markets and Fidelity Salem Street in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Salem Street and Vanguard Emerging 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 Emerging Markets are associated (or correlated) with Fidelity Salem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Salem Street has no effect on the direction of Vanguard Emerging i.e., Vanguard Emerging and Fidelity Salem go up and down completely randomly.
Pair Corralation between Vanguard Emerging and Fidelity Salem
Assuming the 90 days horizon Vanguard Emerging is expected to generate 1.19 times less return on investment than Fidelity Salem. But when comparing it to its historical volatility, Vanguard Emerging Markets is 1.08 times less risky than Fidelity Salem. It trades about 0.08 of its potential returns per unit of risk. Fidelity Salem Street is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,142 in Fidelity Salem Street on September 4, 2024 and sell it today you would earn a total of 230.00 from holding Fidelity Salem Street or generate 20.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Emerging Markets vs. Fidelity Salem Street
Performance |
| Timeline |
| Vanguard Emerging Markets |
| Fidelity Salem Street |
Vanguard Emerging and Fidelity Salem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Emerging and Fidelity Salem
The main advantage of trading using opposite Vanguard Emerging and Fidelity Salem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Emerging position performs unexpectedly, Fidelity Salem 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 Salem will offset losses from the drop in Fidelity Salem's long position.| Vanguard Emerging vs. Adams Diversified Equity | Vanguard Emerging vs. Pgim Conservative Retirement | Vanguard Emerging vs. Lord Abbett Diversified | Vanguard Emerging vs. Delaware Limited Term Diversified |
| Fidelity Salem vs. Fidelity Freedom 2015 | Fidelity Salem vs. Fidelity Puritan Fund | Fidelity Salem vs. Fidelity Puritan Fund | Fidelity Salem vs. Fidelity Pennsylvania Municipal |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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