Correlation Between Fidelity Managed and Vanguard Ftse

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

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

Diversification Opportunities for Fidelity Managed and Vanguard Ftse

0.6

Correlation Coefficient

Fidelity Managed  Vanguard Ftse

Poor diversification

The 3 months correlation between Fidelity and Vanguard is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Managed Retirement and Vanguard Ftse All World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Ftse All and Fidelity Managed 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 Managed Retirement are associated (or correlated) with Vanguard Ftse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Ftse All has no effect on the direction of Fidelity Managed i.e., Fidelity Managed and Vanguard Ftse go up and down completely randomly.

Pair Corralation between Fidelity Managed and Vanguard Ftse

Assuming the 90 days horizon Fidelity Managed is expected to generate 2.23 times less return on investment than Vanguard Ftse. But when comparing it to its historical volatility, Fidelity Managed Retirement is 2.3 times less risky than Vanguard Ftse. It trades about 0.09 of its potential returns per unit of risk. Vanguard Ftse All World is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  21,881  in Vanguard Ftse All World on December 25, 2024 and sell it today you would earn a total of  866.00  from holding Vanguard Ftse All World or generate 3.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Fidelity Managed Retirement  vs.  Vanguard Ftse All World

Fidelity Managed Ret

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Managed Retirement are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fidelity Managed is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vanguard Ftse All

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Ftse All World are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Vanguard Ftse is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fidelity Managed and Vanguard Ftse

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

The idea behind Fidelity Managed Retirement and Vanguard Ftse All World 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.