Correlation Between Vaughan Nelson and Fidelity Series

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

By analyzing existing cross correlation between Vaughan Nelson Value and Fidelity Series 1000, you can compare the effects of market volatilities on Vaughan Nelson and Fidelity Series 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 Vaughan Nelson with a short position of Fidelity Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vaughan Nelson and Fidelity Series.

Diversification Opportunities for Vaughan Nelson and Fidelity Series

0.96

Correlation Coefficient

Vaughan Nelson  Fidelity Series

Almost no diversification

The 3 months correlation between Vaughan and Fidelity is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Vaughan Nelson Value and Fidelity Series 1000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Series 1000 and Vaughan Nelson 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 Vaughan Nelson Value are associated (or correlated) with Fidelity Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Series 1000 has no effect on the direction of Vaughan Nelson i.e., Vaughan Nelson and Fidelity Series go up and down completely randomly.

Pair Corralation between Vaughan Nelson and Fidelity Series

Assuming the 90 days horizon Vaughan Nelson Value is expected to generate 1.45 times more return on investment than Fidelity Series. However, Vaughan Nelson is 1.45 times more volatile than Fidelity Series 1000. It trades about 0.11 of its potential returns per unit of risk. Fidelity Series 1000 is currently generating about 0.11 per unit of risk. If you would invest  1,820  in Vaughan Nelson Value on September 12, 2024 and sell it today you would earn a total of  743.00  from holding Vaughan Nelson Value or generate 40.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.7%
Values	Daily Returns

Vaughan Nelson Value  vs.  Fidelity Series 1000

Vaughan Nelson Value

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vaughan Nelson Value are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Vaughan Nelson showed solid returns over the last few months and may actually be approaching a breakup point.

Fidelity Series 1000

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Series 1000 are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fidelity Series is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vaughan Nelson and Fidelity Series

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

The idea behind Vaughan Nelson Value and Fidelity Series 1000 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.