Correlation Between Vanguard FTSE and Fidelity Canadian
Can any of the company-specific risk be diversified away by investing in both Vanguard FTSE and Fidelity Canadian 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 FTSE and Fidelity Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard FTSE Developed and Fidelity Canadian High, you can compare the effects of market volatilities on Vanguard FTSE and Fidelity Canadian 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 FTSE with a short position of Fidelity Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and Fidelity Canadian.
Diversification Opportunities for Vanguard FTSE and Fidelity Canadian
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Vanguard and Fidelity is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Developed and Fidelity Canadian High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Canadian High and Vanguard FTSE 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 FTSE Developed are associated (or correlated) with Fidelity Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Canadian High has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and Fidelity Canadian go up and down completely randomly.
Pair Corralation between Vanguard FTSE and Fidelity Canadian
Assuming the 90 days trading horizon Vanguard FTSE is expected to generate 5.76 times less return on investment than Fidelity Canadian. In addition to that, Vanguard FTSE is 1.62 times more volatile than Fidelity Canadian High. It trades about 0.04 of its total potential returns per unit of risk. Fidelity Canadian High is currently generating about 0.42 per unit of volatility. If you would invest 2,990 in Fidelity Canadian High on September 4, 2024 and sell it today you would earn a total of 107.00 from holding Fidelity Canadian High or generate 3.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard FTSE Developed vs. Fidelity Canadian High
Performance |
| Timeline |
| Vanguard FTSE Developed |
| Fidelity Canadian High |
Vanguard FTSE and Fidelity Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard FTSE and Fidelity Canadian
The main advantage of trading using opposite Vanguard FTSE and Fidelity Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard FTSE position performs unexpectedly, Fidelity Canadian 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 Canadian will offset losses from the drop in Fidelity Canadian's long position.| Vanguard FTSE vs. Fidelity Canadian High | Vanguard FTSE vs. Fidelity High Dividend | Vanguard FTSE vs. Fidelity High Dividend | Vanguard FTSE vs. Fidelity Dividend for |
| Fidelity Canadian vs. Dynamic Active Global | Fidelity Canadian vs. Dynamic Active Dividend | Fidelity Canadian vs. Dynamic Active Preferred | Fidelity Canadian vs. Dynamic Active Crossover |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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