Correlation Between Fidelity New and Vanguard Russell

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

By analyzing existing cross correlation between Fidelity New Millennium and Vanguard Russell 1000, you can compare the effects of market volatilities on Fidelity New and Vanguard Russell 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 New with a short position of Vanguard Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity New and Vanguard Russell.

Diversification Opportunities for Fidelity New and Vanguard Russell

0.66

Correlation Coefficient

Fidelity New  Vanguard Russell

Poor diversification

The 3 months correlation between Fidelity and Vanguard is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity New Millennium and Vanguard Russell 1000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Russell 1000 and Fidelity New 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 New Millennium are associated (or correlated) with Vanguard Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Russell 1000 has no effect on the direction of Fidelity New i.e., Fidelity New and Vanguard Russell go up and down completely randomly.

Pair Corralation between Fidelity New and Vanguard Russell

Given the investment horizon of 90 days Fidelity New Millennium is expected to under-perform the Vanguard Russell. But the etf apears to be less risky and, when comparing its historical volatility, Fidelity New Millennium is 1.28 times less risky than Vanguard Russell. The etf trades about -0.17 of its potential returns per unit of risk. The Vanguard Russell 1000 is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  10,537  in Vanguard Russell 1000 on October 5, 2024 and sell it today you would lose (223.00) from holding Vanguard Russell 1000 or give up 2.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	90.0%
Values	Daily Returns

Fidelity New Millennium  vs.  Vanguard Russell 1000

Fidelity New Millennium

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity New Millennium are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward indicators, Fidelity New is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Vanguard Russell 1000

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Russell 1000 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Vanguard Russell may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Fidelity New and Vanguard Russell

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

The idea behind Fidelity New Millennium and Vanguard Russell 1000 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.