Correlation Between Fidelity Series and Vanguard Long

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

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

Diversification Opportunities for Fidelity Series and Vanguard Long

0.97

Correlation Coefficient

Fidelity Series  Vanguard Long

Almost no diversification

The 3 months correlation between Fidelity and Vanguard is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Series Long Term and Vanguard Long Term Treasury in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Long Term and Fidelity Series 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 Series Long Term are associated (or correlated) with Vanguard Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Long Term has no effect on the direction of Fidelity Series i.e., Fidelity Series and Vanguard Long go up and down completely randomly.

Pair Corralation between Fidelity Series and Vanguard Long

Assuming the 90 days horizon Fidelity Series Long Term is expected to under-perform the Vanguard Long. In addition to that, Fidelity Series is 1.02 times more volatile than Vanguard Long Term Treasury. It trades about -0.11 of its total potential returns per unit of risk. Vanguard Long Term Treasury is currently generating about -0.1 per unit of volatility. If you would invest  883.00  in Vanguard Long Term Treasury on September 12, 2024 and sell it today you would lose (46.00) from holding Vanguard Long Term Treasury or give up 5.21% of portfolio value over 90 days.

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

Fidelity Series Long Term  vs.  Vanguard Long Term Treasury

Fidelity Series Long

Risk-Adjusted Performance

0 of 100

Very Weak

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

Vanguard Long Term

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Fidelity Series Long Term and Vanguard Long Term Treasury 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.