Correlation Between Vanguard FTSE and Fidelity Growth

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

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

Diversification Opportunities for Vanguard FTSE and Fidelity Growth

-0.76

Correlation Coefficient

Vanguard FTSE  Fidelity Growth

Pay attention - limited upside

The 3 months correlation between Vanguard and Fidelity is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Developed and Fidelity Growth Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Growth Oppo and Vanguard FTSE 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 Vanguard FTSE Developed are associated (or correlated) with Fidelity Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Growth Oppo has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and Fidelity Growth go up and down completely randomly.

Pair Corralation between Vanguard FTSE and Fidelity Growth

Considering the 90-day investment horizon Vanguard FTSE Developed is expected to under-perform the Fidelity Growth. But the etf apears to be less risky and, when comparing its historical volatility, Vanguard FTSE Developed is 1.61 times less risky than Fidelity Growth. The etf trades about -0.21 of its potential returns per unit of risk. The Fidelity Growth Opportunities is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  2,600  in Fidelity Growth Opportunities on October 10, 2024 and sell it today you would lose (38.00) from holding Fidelity Growth Opportunities or give up 1.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	75.0%
Values	Daily Returns

Vanguard FTSE Developed  vs.  Fidelity Growth Opportunities

Vanguard FTSE Developed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard FTSE Developed has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Vanguard FTSE is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Growth Oppo

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Fidelity Growth Opportunities has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very fragile basic indicators, Fidelity Growth may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Vanguard FTSE and Fidelity Growth

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

The idea behind Vanguard FTSE Developed and Fidelity Growth Opportunities 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.