Correlation Between Vanguard 500 and Fidelity Advisor
Can any of the company-specific risk be diversified away by investing in both Vanguard 500 and Fidelity Advisor 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 Advisor 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 Advisor Balanced, you can compare the effects of market volatilities on Vanguard 500 and Fidelity Advisor 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 Advisor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard 500 and Fidelity Advisor.
Diversification Opportunities for Vanguard 500 and Fidelity Advisor
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Vanguard and Fidelity is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard 500 Index and Fidelity Advisor Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Balanced 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 Advisor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Advisor Balanced has no effect on the direction of Vanguard 500 i.e., Vanguard 500 and Fidelity Advisor go up and down completely randomly.
Pair Corralation between Vanguard 500 and Fidelity Advisor
Assuming the 90 days horizon Vanguard 500 Index is expected to generate 1.29 times more return on investment than Fidelity Advisor. However, Vanguard 500 is 1.29 times more volatile than Fidelity Advisor Balanced. It trades about 0.19 of its potential returns per unit of risk. Fidelity Advisor Balanced is currently generating about 0.22 per unit of risk. If you would invest 51,611 in Vanguard 500 Index on September 12, 2024 and sell it today you would earn a total of 4,216 from holding Vanguard 500 Index or generate 8.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 52.38% |
| Values | Daily Returns |
Vanguard 500 Index vs. Fidelity Advisor Balanced
Performance |
| Timeline |
| Vanguard 500 Index |
| Fidelity Advisor Balanced |
Vanguard 500 and Fidelity Advisor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard 500 and Fidelity Advisor
The main advantage of trading using opposite Vanguard 500 and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 500 position performs unexpectedly, Fidelity Advisor 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 Advisor will offset losses from the drop in Fidelity Advisor's long position.| Vanguard 500 vs. Vanguard Total International | Vanguard 500 vs. Vanguard Total Bond | Vanguard 500 vs. Vanguard Small Cap Index | Vanguard 500 vs. Vanguard Reit Index |
| Fidelity Advisor vs. Touchstone Premium Yield | Fidelity Advisor vs. Doubleline Yield Opportunities | Fidelity Advisor vs. Ambrus Core Bond | Fidelity Advisor vs. T Rowe Price |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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