Correlation Between Vanguard Mid and Fidelity Small
Can any of the company-specific risk be diversified away by investing in both Vanguard Mid and Fidelity Small 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 and Fidelity Small 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 Small Mid Cap, you can compare the effects of market volatilities on Vanguard Mid and Fidelity Small 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 with a short position of Fidelity Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Mid and Fidelity Small.
Diversification Opportunities for Vanguard Mid and Fidelity Small
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Fidelity is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Mid Cap Index and Fidelity Small Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Small Mid and Vanguard Mid 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 Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Small Mid has no effect on the direction of Vanguard Mid i.e., Vanguard Mid and Fidelity Small go up and down completely randomly.
Pair Corralation between Vanguard Mid and Fidelity Small
Allowing for the 90-day total investment horizon Vanguard Mid is expected to generate 1.19 times less return on investment than Fidelity Small. But when comparing it to its historical volatility, Vanguard Mid Cap Index is 1.58 times less risky than Fidelity Small. It trades about 0.34 of its potential returns per unit of risk. Fidelity Small Mid Cap is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 2,742 in Fidelity Small Mid Cap on August 28, 2024 and sell it today you would earn a total of 209.00 from holding Fidelity Small Mid Cap or generate 7.62% 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 Small Mid Cap
Performance |
| Timeline |
| Vanguard Mid Cap |
| Fidelity Small Mid |
Vanguard Mid and Fidelity Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Mid and Fidelity Small
The main advantage of trading using opposite Vanguard Mid and Fidelity Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Mid position performs unexpectedly, Fidelity Small 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 Small will offset losses from the drop in Fidelity Small's long position.| Vanguard Mid vs. Vanguard Small Cap Index | Vanguard Mid vs. Vanguard Large Cap Index | Vanguard Mid vs. Vanguard Small Cap Growth | Vanguard Mid vs. Vanguard Small Cap Value |
| Fidelity Small vs. Vanguard Mid Cap Index | Fidelity Small vs. iShares Core SP | Fidelity Small vs. SPDR SP MIDCAP | Fidelity Small vs. First Trust Dorsey |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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