Correlation Between Vanguard Mid-cap and Fidelity Advisor
Can any of the company-specific risk be diversified away by investing in both Vanguard Mid-cap 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 Mid-cap 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 Mid Cap Index and Fidelity Advisor Stock, you can compare the effects of market volatilities on Vanguard Mid-cap 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 Mid-cap with a short position of Fidelity Advisor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Mid-cap and Fidelity Advisor.
Diversification Opportunities for Vanguard Mid-cap and Fidelity Advisor
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Fidelity is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Mid Cap Index and Fidelity Advisor Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Stock and Vanguard Mid-cap 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 Mid Cap 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 Stock has no effect on the direction of Vanguard Mid-cap i.e., Vanguard Mid-cap and Fidelity Advisor go up and down completely randomly.
Pair Corralation between Vanguard Mid-cap and Fidelity Advisor
Assuming the 90 days horizon Vanguard Mid Cap Index is expected to generate 0.83 times more return on investment than Fidelity Advisor. However, Vanguard Mid Cap Index is 1.21 times less risky than Fidelity Advisor. It trades about 0.08 of its potential returns per unit of risk. Fidelity Advisor Stock is currently generating about 0.06 per unit of risk. If you would invest 25,867 in Vanguard Mid Cap Index on September 4, 2024 and sell it today you would earn a total of 9,242 from holding Vanguard Mid Cap Index or generate 35.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Mid Cap Index vs. Fidelity Advisor Stock
Performance |
| Timeline |
| Vanguard Mid Cap |
| Fidelity Advisor Stock |
Vanguard Mid-cap and Fidelity Advisor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Mid-cap and Fidelity Advisor
The main advantage of trading using opposite Vanguard Mid-cap and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Mid-cap 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 Mid-cap vs. Vanguard Small Cap Index | Vanguard Mid-cap vs. Vanguard 500 Index | Vanguard Mid-cap vs. Vanguard Growth Index | Vanguard Mid-cap vs. Vanguard Total International |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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