Correlation Between Vanguard 500 and Fidelity Dividend
Can any of the company-specific risk be diversified away by investing in both Vanguard 500 and Fidelity Dividend 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 500 and Fidelity Dividend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard 500 Index and Fidelity Dividend Growth, you can compare the effects of market volatilities on Vanguard 500 and Fidelity Dividend 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 500 with a short position of Fidelity Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard 500 and Fidelity Dividend.
Diversification Opportunities for Vanguard 500 and Fidelity Dividend
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vanguard and Fidelity is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard 500 Index and Fidelity Dividend Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Dividend Growth and Vanguard 500 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 500 Index are associated (or correlated) with Fidelity Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Dividend Growth has no effect on the direction of Vanguard 500 i.e., Vanguard 500 and Fidelity Dividend go up and down completely randomly.
Pair Corralation between Vanguard 500 and Fidelity Dividend
Assuming the 90 days horizon Vanguard 500 Index is expected to generate 0.75 times more return on investment than Fidelity Dividend. However, Vanguard 500 Index is 1.33 times less risky than Fidelity Dividend. It trades about 0.13 of its potential returns per unit of risk. Fidelity Dividend Growth is currently generating about 0.03 per unit of risk. If you would invest 48,543 in Vanguard 500 Index on September 1, 2024 and sell it today you would earn a total of 6,920 from holding Vanguard 500 Index or generate 14.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Vanguard 500 Index vs. Fidelity Dividend Growth
Performance |
| Timeline |
| Vanguard 500 Index |
| Fidelity Dividend Growth |
Vanguard 500 and Fidelity Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard 500 and Fidelity Dividend
The main advantage of trading using opposite Vanguard 500 and Fidelity Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 500 position performs unexpectedly, Fidelity Dividend 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 Dividend will offset losses from the drop in Fidelity Dividend's long position.| Vanguard 500 vs. Vanguard Total Stock | Vanguard 500 vs. Vanguard Mid Cap Index | Vanguard 500 vs. Vanguard Small Cap Index | Vanguard 500 vs. Vanguard Total Bond |
| Fidelity Dividend vs. Fidelity Mid Cap Stock | Fidelity Dividend vs. Fidelity Equity Income Fund | Fidelity Dividend vs. Fidelity Low Priced Stock | Fidelity Dividend vs. Fidelity Diversified International |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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