Correlation Between Vanguard and Fidelity Value
Can any of the company-specific risk be diversified away by investing in both Vanguard and Fidelity Value 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 and Fidelity Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard SP 500 and Fidelity Value ETF, you can compare the effects of market volatilities on Vanguard and Fidelity Value 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 with a short position of Fidelity Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard and Fidelity Value.
Diversification Opportunities for Vanguard and Fidelity Value
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Fidelity is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard SP 500 and Fidelity Value ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Value ETF and Vanguard 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 SP 500 are associated (or correlated) with Fidelity Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Value ETF has no effect on the direction of Vanguard i.e., Vanguard and Fidelity Value go up and down completely randomly.
Pair Corralation between Vanguard and Fidelity Value
Assuming the 90 days trading horizon Vanguard is expected to generate 1.12 times less return on investment than Fidelity Value. But when comparing it to its historical volatility, Vanguard SP 500 is 1.21 times less risky than Fidelity Value. It trades about 0.13 of its potential returns per unit of risk. Fidelity Value ETF is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,781 in Fidelity Value ETF on August 29, 2024 and sell it today you would earn a total of 269.00 from holding Fidelity Value ETF or generate 15.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard SP 500 vs. Fidelity Value ETF
Performance |
| Timeline |
| Vanguard SP 500 |
| Fidelity Value ETF |
Vanguard and Fidelity Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard and Fidelity Value
The main advantage of trading using opposite Vanguard and Fidelity Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard position performs unexpectedly, Fidelity Value 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 Value will offset losses from the drop in Fidelity Value's long position.| Vanguard vs. Vanguard SP 500 | Vanguard vs. Vanguard FTSE Canadian | Vanguard vs. iShares NASDAQ 100 | Vanguard vs. Vanguard Total Market |
| Fidelity Value vs. Fidelity Canadian Value | Fidelity Value vs. Fidelity High Quality | Fidelity Value vs. Fidelity International Value | Fidelity Value vs. Fidelity Canadian High |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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