Correlation Between Vanguard Small-cap and Fidelity Advisor
Can any of the company-specific risk be diversified away by investing in both Vanguard Small-cap and Fidelity Advisor 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 Small-cap and Fidelity Advisor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Small Cap Index and Fidelity Advisor Small, you can compare the effects of market volatilities on Vanguard Small-cap and Fidelity Advisor 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 Small-cap with a short position of Fidelity Advisor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and Fidelity Advisor.
Diversification Opportunities for Vanguard Small-cap and Fidelity Advisor
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Fidelity is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Index and Fidelity Advisor Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Small and Vanguard Small-cap 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 Small Cap Index are associated (or correlated) with Fidelity Advisor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Advisor Small has no effect on the direction of Vanguard Small-cap i.e., Vanguard Small-cap and Fidelity Advisor go up and down completely randomly.
Pair Corralation between Vanguard Small-cap and Fidelity Advisor
Assuming the 90 days horizon Vanguard Small Cap Index is expected to generate 0.86 times more return on investment than Fidelity Advisor. However, Vanguard Small Cap Index is 1.17 times less risky than Fidelity Advisor. It trades about 0.4 of its potential returns per unit of risk. Fidelity Advisor Small is currently generating about 0.26 per unit of risk. If you would invest 11,289 in Vanguard Small Cap Index on September 1, 2024 and sell it today you would earn a total of 1,185 from holding Vanguard Small Cap Index or generate 10.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Vanguard Small Cap Index vs. Fidelity Advisor Small
Performance |
| Timeline |
| Vanguard Small Cap |
| Fidelity Advisor Small |
Vanguard Small-cap and Fidelity Advisor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small-cap and Fidelity Advisor
The main advantage of trading using opposite Vanguard Small-cap and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small-cap position performs unexpectedly, Fidelity Advisor 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 Advisor will offset losses from the drop in Fidelity Advisor's long position.| Vanguard Small-cap vs. Vanguard Mid Cap Index | Vanguard Small-cap vs. Vanguard 500 Index | Vanguard Small-cap vs. Vanguard Emerging Markets | Vanguard Small-cap vs. Vanguard Reit Index |
| Fidelity Advisor vs. Fidelity Flex Mid | Fidelity Advisor vs. Fidelity Flex International | Fidelity Advisor vs. Fidelity Flex 500 | Fidelity Advisor vs. Fidelity Flex Bond |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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