Correlation Between Vanguard FTSE and Fidelity International

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

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

Diversification Opportunities for Vanguard FTSE and Fidelity International

0.95

Correlation Coefficient

Vanguard FTSE  Fidelity International

Almost no diversification

The 3 months correlation between Vanguard and Fidelity is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE All World and Fidelity International Multifa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity International 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 All World are associated (or correlated) with Fidelity International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity International has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and Fidelity International go up and down completely randomly.

Pair Corralation between Vanguard FTSE and Fidelity International

Considering the 90-day investment horizon Vanguard FTSE is expected to generate 1.21 times less return on investment than Fidelity International. In addition to that, Vanguard FTSE is 1.17 times more volatile than Fidelity International Multifactor. It trades about 0.03 of its total potential returns per unit of risk. Fidelity International Multifactor is currently generating about 0.04 per unit of volatility. If you would invest  2,599  in Fidelity International Multifactor on October 12, 2024 and sell it today you would earn a total of  146.00  from holding Fidelity International Multifactor or generate 5.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.47%
Values	Daily Returns

Vanguard FTSE All World  vs.  Fidelity International Multifa

Vanguard FTSE All

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard FTSE All World has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Fidelity International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity International Multifactor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Fidelity International is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Vanguard FTSE and Fidelity International

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

The idea behind Vanguard FTSE All World and Fidelity International Multifactor 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.