Correlation Between Fidelity Emerging and Vanguard Windsor

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

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

Diversification Opportunities for Fidelity Emerging and Vanguard Windsor

0.33

Correlation Coefficient

Fidelity Emerging  Vanguard Windsor

Weak diversification

The 3 months correlation between Fidelity and Vanguard is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Emerging Asia and Vanguard Windsor Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Windsor and Fidelity Emerging 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 Emerging Asia are associated (or correlated) with Vanguard Windsor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Windsor has no effect on the direction of Fidelity Emerging i.e., Fidelity Emerging and Vanguard Windsor go up and down completely randomly.

Pair Corralation between Fidelity Emerging and Vanguard Windsor

Assuming the 90 days horizon Fidelity Emerging Asia is expected to generate 1.77 times more return on investment than Vanguard Windsor. However, Fidelity Emerging is 1.77 times more volatile than Vanguard Windsor Fund. It trades about 0.17 of its potential returns per unit of risk. Vanguard Windsor Fund is currently generating about 0.07 per unit of risk. If you would invest  4,464  in Fidelity Emerging Asia on September 16, 2024 and sell it today you would earn a total of  615.00  from holding Fidelity Emerging Asia or generate 13.78% return on investment over 90 days.

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

Fidelity Emerging Asia  vs.  Vanguard Windsor Fund

Fidelity Emerging Asia

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Emerging Asia are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Fidelity Emerging showed solid returns over the last few months and may actually be approaching a breakup point.

Vanguard Windsor

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Windsor Fund are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Vanguard Windsor 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 Emerging and Vanguard Windsor

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

The idea behind Fidelity Emerging Asia and Vanguard Windsor Fund 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.