Correlation Between Vanguard Health and Fidelity MSCI

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

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

Diversification Opportunities for Vanguard Health and Fidelity MSCI

0.97

Correlation Coefficient

Vanguard Health  Fidelity MSCI

Almost no diversification

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

Pair Corralation between Vanguard Health and Fidelity MSCI

Considering the 90-day investment horizon Vanguard Health Care is expected to generate 1.0 times more return on investment than Fidelity MSCI. However, Vanguard Health is 1.0 times more volatile than Fidelity MSCI Health. It trades about -0.33 of its potential returns per unit of risk. Fidelity MSCI Health is currently generating about -0.36 per unit of risk. If you would invest  27,041  in Vanguard Health Care on September 28, 2024 and sell it today you would lose (1,254) from holding Vanguard Health Care or give up 4.64% of portfolio value over 90 days.

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

Vanguard Health Care  vs.  Fidelity MSCI Health

Vanguard Health Care

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Health Care has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Etf's technical 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 MSCI Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity MSCI Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Etf's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with Vanguard Health and Fidelity MSCI

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

The idea behind Vanguard Health Care and Fidelity MSCI Health 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.