Correlation Between Vanguard Russell and Fidelity Growth

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

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

Diversification Opportunities for Vanguard Russell and Fidelity Growth

0.77

Correlation Coefficient

Vanguard Russell  Fidelity Growth

Poor diversification

The 3 months correlation between Vanguard and Fidelity is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Russell 1000 and Fidelity Growth Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Growth Oppo and Vanguard Russell 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 Russell 1000 are associated (or correlated) with Fidelity Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Growth Oppo has no effect on the direction of Vanguard Russell i.e., Vanguard Russell and Fidelity Growth go up and down completely randomly.

Pair Corralation between Vanguard Russell and Fidelity Growth

Given the investment horizon of 90 days Vanguard Russell is expected to generate 1.02 times less return on investment than Fidelity Growth. But when comparing it to its historical volatility, Vanguard Russell 1000 is 1.03 times less risky than Fidelity Growth. It trades about 0.11 of its potential returns per unit of risk. Fidelity Growth Opportunities is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,395  in Fidelity Growth Opportunities on October 4, 2024 and sell it today you would earn a total of  167.00  from holding Fidelity Growth Opportunities or generate 6.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.77%
Values	Daily Returns

Vanguard Russell 1000  vs.  Fidelity Growth Opportunities

Vanguard Russell 1000

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Russell 1000 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Vanguard Russell may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Fidelity Growth Oppo

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Growth Opportunities are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Fidelity Growth may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Vanguard Russell and Fidelity Growth

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

The idea behind Vanguard Russell 1000 and Fidelity Growth Opportunities 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.