Correlation Between Vanguard Intermediate and Fidelity Corporate
Can any of the company-specific risk be diversified away by investing in both Vanguard Intermediate and Fidelity Corporate 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 Intermediate and Fidelity Corporate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Intermediate Term Porate and Fidelity Porate Bond, you can compare the effects of market volatilities on Vanguard Intermediate and Fidelity Corporate 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 Intermediate with a short position of Fidelity Corporate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Intermediate and Fidelity Corporate.
Diversification Opportunities for Vanguard Intermediate and Fidelity Corporate
0.97 | Correlation Coefficient |
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 Intermediate Term Por and Fidelity Porate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Porate Bond and Vanguard Intermediate 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 Intermediate Term Porate are associated (or correlated) with Fidelity Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Porate Bond has no effect on the direction of Vanguard Intermediate i.e., Vanguard Intermediate and Fidelity Corporate go up and down completely randomly.
Pair Corralation between Vanguard Intermediate and Fidelity Corporate
Assuming the 90 days horizon Vanguard Intermediate is expected to generate 1.12 times less return on investment than Fidelity Corporate. But when comparing it to its historical volatility, Vanguard Intermediate Term Porate is 1.09 times less risky than Fidelity Corporate. It trades about 0.06 of its potential returns per unit of risk. Fidelity Porate Bond is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 943.00 in Fidelity Porate Bond on October 24, 2024 and sell it today you would earn a total of 99.00 from holding Fidelity Porate Bond or generate 10.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Vanguard Intermediate Term Por vs. Fidelity Porate Bond
Performance |
Timeline |
Vanguard Intermediate |
Fidelity Porate Bond |
Vanguard Intermediate and Fidelity Corporate Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Vanguard Intermediate and Fidelity Corporate
The main advantage of trading using opposite Vanguard Intermediate and Fidelity Corporate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Intermediate position performs unexpectedly, Fidelity Corporate 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 Corporate will offset losses from the drop in Fidelity Corporate's long position.The idea behind Vanguard Intermediate Term Porate and Fidelity Porate Bond 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.
Fidelity Corporate vs. Fidelity Total Bond | Fidelity Corporate vs. Fidelity Advisor Limited | Fidelity Corporate vs. Fidelity Focused High | Fidelity Corporate vs. Fidelity Investment Grade |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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