Correlation Between Vanguard Inflation and Fidelity Inflation
Can any of the company-specific risk be diversified away by investing in both Vanguard Inflation and Fidelity Inflation 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 Inflation and Fidelity Inflation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Inflation Protected Securities and Fidelity Inflation Protected Bond, you can compare the effects of market volatilities on Vanguard Inflation and Fidelity Inflation 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 Inflation with a short position of Fidelity Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Inflation and Fidelity Inflation.
Diversification Opportunities for Vanguard Inflation and Fidelity Inflation
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Vanguard and Fidelity is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Inflation Protected S and Fidelity Inflation Protected B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Inflation and Vanguard Inflation 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 Inflation Protected Securities are associated (or correlated) with Fidelity Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Inflation has no effect on the direction of Vanguard Inflation i.e., Vanguard Inflation and Fidelity Inflation go up and down completely randomly.
Pair Corralation between Vanguard Inflation and Fidelity Inflation
Assuming the 90 days horizon Vanguard Inflation is expected to generate 1.08 times less return on investment than Fidelity Inflation. In addition to that, Vanguard Inflation is 1.01 times more volatile than Fidelity Inflation Protected Bond. It trades about 0.04 of its total potential returns per unit of risk. Fidelity Inflation Protected Bond is currently generating about 0.04 per unit of volatility. If you would invest 858.00 in Fidelity Inflation Protected Bond on September 12, 2024 and sell it today you would earn a total of 61.00 from holding Fidelity Inflation Protected Bond or generate 7.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Inflation Protected S vs. Fidelity Inflation Protected B
Performance |
| Timeline |
| Vanguard Inflation |
| Fidelity Inflation |
Vanguard Inflation and Fidelity Inflation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Inflation and Fidelity Inflation
The main advantage of trading using opposite Vanguard Inflation and Fidelity Inflation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Inflation position performs unexpectedly, Fidelity Inflation 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 Inflation will offset losses from the drop in Fidelity Inflation's long position.| Vanguard Inflation vs. Vanguard Short Term Investment Grade | Vanguard Inflation vs. Vanguard High Yield Porate | Vanguard Inflation vs. Vanguard Gnma Fund | Vanguard Inflation vs. Vanguard Reit Index |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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