Correlation Between Vanguard Ftse and Fidelity Latin

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

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

Diversification Opportunities for Vanguard Ftse and Fidelity Latin

-0.65

Correlation Coefficient

Vanguard Ftse  Fidelity Latin

Excellent diversification

The 3 months correlation between Vanguard and Fidelity is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Ftse Social and Fidelity Latin America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Latin America 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 Social are associated (or correlated) with Fidelity Latin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Latin America has no effect on the direction of Vanguard Ftse i.e., Vanguard Ftse and Fidelity Latin go up and down completely randomly.

Pair Corralation between Vanguard Ftse and Fidelity Latin

Assuming the 90 days horizon Vanguard Ftse Social is expected to generate 1.41 times more return on investment than Fidelity Latin. However, Vanguard Ftse is 1.41 times more volatile than Fidelity Latin America. It trades about 0.19 of its potential returns per unit of risk. Fidelity Latin America is currently generating about 0.05 per unit of risk. If you would invest  5,221  in Vanguard Ftse Social on September 2, 2024 and sell it today you would earn a total of  525.00  from holding Vanguard Ftse Social or generate 10.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	40.63%
Values	Daily Returns

Vanguard Ftse Social  vs.  Fidelity Latin America

Vanguard Ftse Social

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Ftse Social are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Ftse may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fidelity Latin America

Risk-Adjusted Performance

0 of 100

Insignificant

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

Pair Trading with Vanguard Ftse and Fidelity Latin

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

The idea behind Vanguard Ftse Social and Fidelity Latin America 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.

Check out your portfolio center.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.