Correlation Between Vanguard Ohio and Fidelity Ohio

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

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

Diversification Opportunities for Vanguard Ohio and Fidelity Ohio

0.99

Correlation Coefficient

Vanguard Ohio  Fidelity Ohio

No risk reduction

The 3 months correlation between Vanguard and Fidelity is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Ohio Long Term and Fidelity Ohio Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Ohio Municipal and Vanguard Ohio 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 Ohio Long Term are associated (or correlated) with Fidelity Ohio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Ohio Municipal has no effect on the direction of Vanguard Ohio i.e., Vanguard Ohio and Fidelity Ohio go up and down completely randomly.

Pair Corralation between Vanguard Ohio and Fidelity Ohio

Assuming the 90 days horizon Vanguard Ohio is expected to generate 1.01 times less return on investment than Fidelity Ohio. In addition to that, Vanguard Ohio is 1.27 times more volatile than Fidelity Ohio Municipal. It trades about 0.05 of its total potential returns per unit of risk. Fidelity Ohio Municipal is currently generating about 0.06 per unit of volatility. If you would invest  1,126  in Fidelity Ohio Municipal on December 23, 2024 and sell it today you would earn a total of  8.00  from holding Fidelity Ohio Municipal or generate 0.71% return on investment over 90 days.

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

Vanguard Ohio Long Term  vs.  Fidelity Ohio Municipal

Vanguard Ohio Long

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Ohio Long Term are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Vanguard Ohio is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Ohio Municipal

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Ohio Municipal are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Fidelity Ohio 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 Ohio and Fidelity Ohio

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

The idea behind Vanguard Ohio Long Term and Fidelity Ohio Municipal 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.