Correlation Between Fidelity Capital and Vanguard High-yield
Can any of the company-specific risk be diversified away by investing in both Fidelity Capital and Vanguard High-yield 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 Fidelity Capital and Vanguard High-yield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Capital Income and Vanguard High Yield Corporate, you can compare the effects of market volatilities on Fidelity Capital and Vanguard High-yield 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 Fidelity Capital with a short position of Vanguard High-yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Capital and Vanguard High-yield.
Diversification Opportunities for Fidelity Capital and Vanguard High-yield
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Vanguard is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Capital Income and Vanguard High Yield Corporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard High Yield and Fidelity Capital 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 Fidelity Capital Income are associated (or correlated) with Vanguard High-yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard High Yield has no effect on the direction of Fidelity Capital i.e., Fidelity Capital and Vanguard High-yield go up and down completely randomly.
Pair Corralation between Fidelity Capital and Vanguard High-yield
Assuming the 90 days horizon Fidelity Capital Income is expected to under-perform the Vanguard High-yield. In addition to that, Fidelity Capital is 1.97 times more volatile than Vanguard High Yield Corporate. It trades about -0.03 of its total potential returns per unit of risk. Vanguard High Yield Corporate is currently generating about 0.08 per unit of volatility. If you would invest 542.00 in Vanguard High Yield Corporate on December 2, 2024 and sell it today you would earn a total of 5.00 from holding Vanguard High Yield Corporate or generate 0.92% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Fidelity Capital Income vs. Vanguard High Yield Corporate
Performance |
Timeline |
Fidelity Capital Income |
Vanguard High Yield |
Fidelity Capital and Vanguard High-yield Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fidelity Capital and Vanguard High-yield
The main advantage of trading using opposite Fidelity Capital and Vanguard High-yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Capital position performs unexpectedly, Vanguard High-yield 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 Vanguard High-yield will offset losses from the drop in Vanguard High-yield's long position.Fidelity Capital vs. Fidelity High Income | Fidelity Capital vs. Fidelity New Markets | Fidelity Capital vs. Fidelity Total Bond | Fidelity Capital vs. Fidelity Balanced Fund |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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