Correlation Between Vanguard Large and Fidelity Small
Can any of the company-specific risk be diversified away by investing in both Vanguard Large 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 Large 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 Large Cap Index and Fidelity Small Mid Factor, you can compare the effects of market volatilities on Vanguard Large 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 Large with a short position of Fidelity Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Large and Fidelity Small.
Diversification Opportunities for Vanguard Large 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 Large Cap Index 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 Large 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 Large Cap Index 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 Large i.e., Vanguard Large and Fidelity Small go up and down completely randomly.
Pair Corralation between Vanguard Large and Fidelity Small
Allowing for the 90-day total investment horizon Vanguard Large is expected to generate 1.42 times less return on investment than Fidelity Small. But when comparing it to its historical volatility, Vanguard Large Cap Index is 1.71 times less risky than Fidelity Small. It trades about 0.39 of its potential returns per unit of risk. Fidelity Small Mid Factor is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 4,087 in Fidelity Small Mid Factor on September 1, 2024 and sell it today you would earn a total of 381.00 from holding Fidelity Small Mid Factor or generate 9.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Vanguard Large Cap Index vs. Fidelity Small Mid Factor
Performance |
| Timeline |
| Vanguard Large Cap |
| Fidelity Small Mid |
Vanguard Large and Fidelity Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Large and Fidelity Small
The main advantage of trading using opposite Vanguard Large and Fidelity Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Large 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 Large vs. Vanguard Mid Cap Index | Vanguard Large vs. Vanguard Small Cap Index | Vanguard Large vs. Vanguard Extended Market | Vanguard Large vs. Vanguard Small Cap Growth |
| 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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