Correlation Between Vanguard Materials and Fidelity Contrafund
Can any of the company-specific risk be diversified away by investing in both Vanguard Materials and Fidelity Contrafund 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 Materials and Fidelity Contrafund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Materials Index and Fidelity Contrafund, you can compare the effects of market volatilities on Vanguard Materials and Fidelity Contrafund 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 Materials with a short position of Fidelity Contrafund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Materials and Fidelity Contrafund.
Diversification Opportunities for Vanguard Materials and Fidelity Contrafund
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Fidelity is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Materials Index and Fidelity Contrafund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Contrafund and Vanguard Materials 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 Materials Index are associated (or correlated) with Fidelity Contrafund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Contrafund has no effect on the direction of Vanguard Materials i.e., Vanguard Materials and Fidelity Contrafund go up and down completely randomly.
Pair Corralation between Vanguard Materials and Fidelity Contrafund
Assuming the 90 days horizon Vanguard Materials is expected to generate 1.92 times less return on investment than Fidelity Contrafund. In addition to that, Vanguard Materials is 1.0 times more volatile than Fidelity Contrafund. It trades about 0.07 of its total potential returns per unit of risk. Fidelity Contrafund is currently generating about 0.13 per unit of volatility. If you would invest 1,431 in Fidelity Contrafund on August 31, 2024 and sell it today you would earn a total of 763.00 from holding Fidelity Contrafund or generate 53.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Vanguard Materials Index vs. Fidelity Contrafund
Performance |
| Timeline |
| Vanguard Materials Index |
| Fidelity Contrafund |
Vanguard Materials and Fidelity Contrafund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Materials and Fidelity Contrafund
The main advantage of trading using opposite Vanguard Materials and Fidelity Contrafund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Materials position performs unexpectedly, Fidelity Contrafund 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 Contrafund will offset losses from the drop in Fidelity Contrafund's long position.| Vanguard Materials vs. Vanguard Emerging Markets | Vanguard Materials vs. Vanguard Total International | Vanguard Materials vs. Vanguard Reit Index | Vanguard Materials vs. Vanguard Industrials Index |
| Fidelity Contrafund vs. Fidelity Low Priced Stock | Fidelity Contrafund vs. Fidelity Growth Pany | Fidelity Contrafund vs. Fidelity Magellan Fund | Fidelity Contrafund vs. Fidelity Diversified International |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |