Correlation Between Vanguard Total and Fidelity® Government
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and Fidelity® Government 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 Total and Fidelity® Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Total Stock and Fidelity Government Money, you can compare the effects of market volatilities on Vanguard Total and Fidelity® Government 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 Total with a short position of Fidelity® Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Fidelity® Government.
Diversification Opportunities for Vanguard Total and Fidelity® Government
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Vanguard and Fidelity® is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Stock and Fidelity Government Money in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Government Money and Vanguard Total 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 Total Stock are associated (or correlated) with Fidelity® Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Government Money has no effect on the direction of Vanguard Total i.e., Vanguard Total and Fidelity® Government go up and down completely randomly.
Pair Corralation between Vanguard Total and Fidelity® Government
Assuming the 90 days horizon Vanguard Total Stock is expected to generate 11.17 times more return on investment than Fidelity® Government. However, Vanguard Total is 11.17 times more volatile than Fidelity Government Money. It trades about 0.15 of its potential returns per unit of risk. Fidelity Government Money is currently generating about 0.07 per unit of risk. If you would invest 11,026 in Vanguard Total Stock on September 4, 2024 and sell it today you would earn a total of 3,566 from holding Vanguard Total Stock or generate 32.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 81.3% |
| Values | Daily Returns |
Vanguard Total Stock vs. Fidelity Government Money
Performance |
| Timeline |
| Vanguard Total Stock |
| Fidelity Government Money |
Vanguard Total and Fidelity® Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and Fidelity® Government
The main advantage of trading using opposite Vanguard Total and Fidelity® Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, Fidelity® Government 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® Government will offset losses from the drop in Fidelity® Government's long position.| Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Total Bond | Vanguard Total vs. Vanguard Small Cap Index | Vanguard Total 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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