Correlation Between Fidelity New and Vanguard New

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

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

Diversification Opportunities for Fidelity New and Vanguard New

0.89

Correlation Coefficient

Fidelity New  Vanguard New

Very poor diversification

The 3 months correlation between Fidelity and Vanguard is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity New York and Vanguard New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard New York 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 York are associated (or correlated) with Vanguard New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard New York has no effect on the direction of Fidelity New i.e., Fidelity New and Vanguard New go up and down completely randomly.

Pair Corralation between Fidelity New and Vanguard New

Assuming the 90 days horizon Fidelity New is expected to generate 1.01 times less return on investment than Vanguard New. But when comparing it to its historical volatility, Fidelity New York is 1.05 times less risky than Vanguard New. It trades about 0.06 of its potential returns per unit of risk. Vanguard New York is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,040  in Vanguard New York on September 27, 2024 and sell it today you would earn a total of  41.00  from holding Vanguard New York or generate 3.94% return on investment over 90 days.

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

Fidelity New York  vs.  Vanguard New York

Fidelity New York

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity New York has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Fidelity New is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vanguard New York

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard New York has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Vanguard New 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 New and Vanguard New

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

The idea behind Fidelity New York and Vanguard New York 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.