Correlation Between Vanguard Explorer and Fidelity Strategic
Can any of the company-specific risk be diversified away by investing in both Vanguard Explorer and Fidelity Strategic 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 Explorer and Fidelity Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Explorer Fund and Fidelity Strategic Real, you can compare the effects of market volatilities on Vanguard Explorer and Fidelity Strategic 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 Explorer with a short position of Fidelity Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Explorer and Fidelity Strategic.
Diversification Opportunities for Vanguard Explorer and Fidelity Strategic
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Fidelity is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Explorer Fund and Fidelity Strategic Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Strategic Real and Vanguard Explorer 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 Explorer Fund are associated (or correlated) with Fidelity Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Strategic Real has no effect on the direction of Vanguard Explorer i.e., Vanguard Explorer and Fidelity Strategic go up and down completely randomly.
Pair Corralation between Vanguard Explorer and Fidelity Strategic
Assuming the 90 days horizon Vanguard Explorer Fund is expected to generate 4.42 times more return on investment than Fidelity Strategic. However, Vanguard Explorer is 4.42 times more volatile than Fidelity Strategic Real. It trades about 0.32 of its potential returns per unit of risk. Fidelity Strategic Real is currently generating about 0.23 per unit of risk. If you would invest 12,185 in Vanguard Explorer Fund on September 3, 2024 and sell it today you would earn a total of 1,008 from holding Vanguard Explorer Fund or generate 8.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Explorer Fund vs. Fidelity Strategic Real
Performance |
| Timeline |
| Vanguard Explorer |
| Fidelity Strategic Real |
Vanguard Explorer and Fidelity Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Explorer and Fidelity Strategic
The main advantage of trading using opposite Vanguard Explorer and Fidelity Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Explorer position performs unexpectedly, Fidelity Strategic 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 Strategic will offset losses from the drop in Fidelity Strategic's long position.| Vanguard Explorer vs. Vanguard International Growth | Vanguard Explorer vs. Vanguard Windsor Fund | Vanguard Explorer vs. SCOR PK | Vanguard Explorer vs. HUMANA INC |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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