Correlation Between Vanguard Equity and Fidelity 500
Can any of the company-specific risk be diversified away by investing in both Vanguard Equity and Fidelity 500 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 Equity and Fidelity 500 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Equity Income and Fidelity 500 Index, you can compare the effects of market volatilities on Vanguard Equity and Fidelity 500 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 Equity with a short position of Fidelity 500. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Equity and Fidelity 500.
Diversification Opportunities for Vanguard Equity and Fidelity 500
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Fidelity is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Equity Income and Fidelity 500 Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity 500 Index and Vanguard Equity 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 Equity Income are associated (or correlated) with Fidelity 500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity 500 Index has no effect on the direction of Vanguard Equity i.e., Vanguard Equity and Fidelity 500 go up and down completely randomly.
Pair Corralation between Vanguard Equity and Fidelity 500
Assuming the 90 days horizon Vanguard Equity Income is expected to generate 0.96 times more return on investment than Fidelity 500. However, Vanguard Equity Income is 1.04 times less risky than Fidelity 500. It trades about 0.15 of its potential returns per unit of risk. Fidelity 500 Index is currently generating about 0.14 per unit of risk. If you would invest 4,600 in Vanguard Equity Income on August 25, 2024 and sell it today you would earn a total of 118.00 from holding Vanguard Equity Income or generate 2.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Equity Income vs. Fidelity 500 Index
Performance |
| Timeline |
| Vanguard Equity Income |
| Fidelity 500 Index |
Vanguard Equity and Fidelity 500 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Equity and Fidelity 500
The main advantage of trading using opposite Vanguard Equity and Fidelity 500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Equity position performs unexpectedly, Fidelity 500 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 500 will offset losses from the drop in Fidelity 500's long position.| Vanguard Equity vs. Vanguard Explorer Fund | Vanguard Equity vs. Vanguard International Growth | Vanguard Equity vs. Vanguard Primecap Fund | Vanguard Equity vs. Vanguard Wellington Fund |
| Fidelity 500 vs. Fidelity Total Market | Fidelity 500 vs. Fidelity Extended Market | Fidelity 500 vs. Fidelity Zero Total | Fidelity 500 vs. Fidelity Small Cap |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |