Correlation Between Vanguard Total and Fidelity Government

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Can any of the company-specific risk be diversified away by investing in both Vanguard Total and Fidelity Government 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 Government 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 Government Money, you can compare the effects of market volatilities on Vanguard Total and Fidelity Government 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 Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Fidelity Government.

Diversification Opportunities for Vanguard Total and Fidelity Government

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Vanguard and Fidelity is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Stock and Fidelity Government Money in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Government Money 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 Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Government Money has no effect on the direction of Vanguard Total i.e., Vanguard Total and Fidelity Government go up and down completely randomly.

Pair Corralation between Vanguard Total and Fidelity Government

If you would invest  12,894  in Vanguard Total Stock on September 12, 2024 and sell it today you would earn a total of  1,670  from holding Vanguard Total Stock or generate 12.95% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy90.32%
ValuesDaily Returns

Vanguard Total Stock  vs.  Fidelity Government Money

 Performance 
       Timeline  
Vanguard Total Stock 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Stock are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Vanguard Total may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Fidelity Government Money 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Fidelity Government Money has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Fidelity Government is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vanguard Total and Fidelity Government Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vanguard Total and Fidelity Government

The main advantage of trading using opposite Vanguard Total and Fidelity Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, Fidelity Government 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 Government will offset losses from the drop in Fidelity Government's long position.
The idea behind Vanguard Total Stock and Fidelity Government Money pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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