Correlation Between Vanguard Russell and Fidelity Small
Can any of the company-specific risk be diversified away by investing in both Vanguard Russell 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 Russell 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 Russell 2000 and Fidelity Small Mid Factor, you can compare the effects of market volatilities on Vanguard Russell 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 Russell with a short position of Fidelity Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Russell and Fidelity Small.
Diversification Opportunities for Vanguard Russell and Fidelity Small
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Vanguard and Fidelity is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Russell 2000 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 Russell 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 Russell 2000 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 Russell i.e., Vanguard Russell and Fidelity Small go up and down completely randomly.
Pair Corralation between Vanguard Russell and Fidelity Small
Given the investment horizon of 90 days Vanguard Russell 2000 is expected to generate 1.24 times more return on investment than Fidelity Small. However, Vanguard Russell is 1.24 times more volatile than Fidelity Small Mid Factor. It trades about 0.24 of its potential returns per unit of risk. Fidelity Small Mid Factor is currently generating about 0.25 per unit of risk. If you would invest 8,891 in Vanguard Russell 2000 on August 25, 2024 and sell it today you would earn a total of 767.00 from holding Vanguard Russell 2000 or generate 8.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Russell 2000 vs. Fidelity Small Mid Factor
Performance |
| Timeline |
| Vanguard Russell 2000 |
| Fidelity Small Mid |
Vanguard Russell and Fidelity Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Russell and Fidelity Small
The main advantage of trading using opposite Vanguard Russell and Fidelity Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Russell 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 Russell vs. Vanguard Russell 2000 | Vanguard Russell vs. Vanguard Russell 2000 | Vanguard Russell vs. Vanguard Russell 1000 | Vanguard Russell vs. Vanguard Russell 1000 |
| 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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