Correlation Between Fidelity Blue and Vanguard Value

Can any of the company-specific risk be diversified away by investing in both Fidelity Blue and Vanguard Value 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 Blue and Vanguard Value into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fidelity Blue Chip and Vanguard Value Index, you can compare the effects of market volatilities on Fidelity Blue and Vanguard Value 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 Blue with a short position of Vanguard Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Blue and Vanguard Value.

Diversification Opportunities for Fidelity Blue and Vanguard Value

0.82

Correlation Coefficient

Fidelity Blue  Vanguard Value

Very poor diversification

The 3 months correlation between Fidelity and Vanguard is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Blue Chip and Vanguard Value Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Value Index and Fidelity Blue 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 Blue Chip are associated (or correlated) with Vanguard Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Value Index has no effect on the direction of Fidelity Blue i.e., Fidelity Blue and Vanguard Value go up and down completely randomly.

Pair Corralation between Fidelity Blue and Vanguard Value

Given the investment horizon of 90 days Fidelity Blue is expected to generate 1.44 times less return on investment than Vanguard Value. But when comparing it to its historical volatility, Fidelity Blue Chip is 1.07 times less risky than Vanguard Value. It trades about 0.03 of its potential returns per unit of risk. Vanguard Value Index is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  17,067  in Vanguard Value Index on December 27, 2024 and sell it today you would earn a total of  336.00  from holding Vanguard Value Index or generate 1.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Fidelity Blue Chip  vs.  Vanguard Value Index

Fidelity Blue Chip

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Blue Chip are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable fundamental indicators, Fidelity Blue is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Vanguard Value Index

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Value Index are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Vanguard Value is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Fidelity Blue and Vanguard Value

The main advantage of trading using opposite Fidelity Blue and Vanguard Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Blue position performs unexpectedly, Vanguard Value 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 Value will offset losses from the drop in Vanguard Value's long position.

The idea behind Fidelity Blue Chip and Vanguard Value Index 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.