Correlation Between Vanguard and Fidelity Momentum
Can any of the company-specific risk be diversified away by investing in both Vanguard and Fidelity Momentum 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 and Fidelity Momentum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard SP 500 and Fidelity Momentum ETF, you can compare the effects of market volatilities on Vanguard and Fidelity Momentum 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 with a short position of Fidelity Momentum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard and Fidelity Momentum.
Diversification Opportunities for Vanguard and Fidelity Momentum
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Vanguard and Fidelity is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard SP 500 and Fidelity Momentum ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Momentum ETF and Vanguard 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 SP 500 are associated (or correlated) with Fidelity Momentum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Momentum ETF has no effect on the direction of Vanguard i.e., Vanguard and Fidelity Momentum go up and down completely randomly.
Pair Corralation between Vanguard and Fidelity Momentum
Assuming the 90 days trading horizon Vanguard is expected to generate 1.4 times less return on investment than Fidelity Momentum. But when comparing it to its historical volatility, Vanguard SP 500 is 1.24 times less risky than Fidelity Momentum. It trades about 0.17 of its potential returns per unit of risk. Fidelity Momentum ETF is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,397 in Fidelity Momentum ETF on August 29, 2024 and sell it today you would earn a total of 354.00 from holding Fidelity Momentum ETF or generate 25.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard SP 500 vs. Fidelity Momentum ETF
Performance |
| Timeline |
| Vanguard SP 500 |
| Fidelity Momentum ETF |
Vanguard and Fidelity Momentum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard and Fidelity Momentum
The main advantage of trading using opposite Vanguard and Fidelity Momentum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard position performs unexpectedly, Fidelity Momentum 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 Momentum will offset losses from the drop in Fidelity Momentum's long position.| Vanguard vs. Vanguard FTSE Canadian | Vanguard vs. Vanguard Growth Portfolio | Vanguard vs. Vanguard SP 500 | Vanguard vs. Vanguard FTSE Canada |
| Fidelity Momentum vs. iShares SPTSX 60 | Fidelity Momentum vs. iShares Core SP | Fidelity Momentum vs. iShares Core SPTSX | Fidelity Momentum vs. BMO Aggregate Bond |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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