Correlation Between Vanguard European and Fidelity Europe
Can any of the company-specific risk be diversified away by investing in both Vanguard European and Fidelity Europe 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 European and Fidelity Europe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard European Stock and Fidelity Europe Fund, you can compare the effects of market volatilities on Vanguard European and Fidelity Europe 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 European with a short position of Fidelity Europe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard European and Fidelity Europe.
Diversification Opportunities for Vanguard European and Fidelity Europe
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 European Stock and Fidelity Europe Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Europe and Vanguard European 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 European Stock are associated (or correlated) with Fidelity Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Europe has no effect on the direction of Vanguard European i.e., Vanguard European and Fidelity Europe go up and down completely randomly.
Pair Corralation between Vanguard European and Fidelity Europe
Assuming the 90 days horizon Vanguard European Stock is expected to under-perform the Fidelity Europe. In addition to that, Vanguard European is 1.05 times more volatile than Fidelity Europe Fund. It trades about -0.3 of its total potential returns per unit of risk. Fidelity Europe Fund is currently generating about -0.24 per unit of volatility. If you would invest 3,753 in Fidelity Europe Fund on August 28, 2024 and sell it today you would lose (160.00) from holding Fidelity Europe Fund or give up 4.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard European Stock vs. Fidelity Europe Fund
Performance |
| Timeline |
| Vanguard European Stock |
| Fidelity Europe |
Vanguard European and Fidelity Europe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard European and Fidelity Europe
The main advantage of trading using opposite Vanguard European and Fidelity Europe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard European position performs unexpectedly, Fidelity Europe 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 Europe will offset losses from the drop in Fidelity Europe's long position.| Vanguard European vs. Vanguard Materials Index | Vanguard European vs. Vanguard Limited Term Tax Exempt | Vanguard European vs. Vanguard Limited Term Tax Exempt | Vanguard European vs. Vanguard Global Minimum |
| Fidelity Europe vs. Neuberger Berman Real | Fidelity Europe vs. Commonwealth Real Estate | Fidelity Europe vs. Prudential Real Estate | Fidelity Europe vs. Deutsche Real Estate |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |