Correlation Between Vanguard Total and Fidelity Small
Can any of the company-specific risk be diversified away by investing in both Vanguard Total 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 Total 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 Total Stock and Fidelity Small Mid Factor, you can compare the effects of market volatilities on Vanguard Total 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 Total with a short position of Fidelity Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Fidelity Small.
Diversification Opportunities for Vanguard Total and Fidelity Small
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Fidelity is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Stock and Fidelity Small Mid Factor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Small Mid and Vanguard Total 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 Total Stock 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 Total i.e., Vanguard Total and Fidelity Small go up and down completely randomly.
Pair Corralation between Vanguard Total and Fidelity Small
Considering the 90-day investment horizon Vanguard Total is expected to generate 1.44 times less return on investment than Fidelity Small. But when comparing it to its historical volatility, Vanguard Total Stock is 1.43 times less risky than Fidelity Small. It trades about 0.18 of its potential returns per unit of risk. Fidelity Small Mid Factor is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 4,125 in Fidelity Small Mid Factor on August 28, 2024 and sell it today you would earn a total of 360.00 from holding Fidelity Small Mid Factor or generate 8.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Total Stock vs. Fidelity Small Mid Factor
Performance |
| Timeline |
| Vanguard Total Stock |
| Fidelity Small Mid |
Vanguard Total and Fidelity Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and Fidelity Small
The main advantage of trading using opposite Vanguard Total and Fidelity Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total 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 Total vs. Vanguard SP 500 | Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Real Estate | Vanguard Total vs. Vanguard Total Bond |
| Fidelity Small vs. Fidelity Emerging Markets | Fidelity Small vs. Fidelity International Multifactor | Fidelity Small vs. Fidelity Quality Factor | Fidelity Small vs. Fidelity Low Volatility |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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