Correlation Between Vanguard Small-cap and Fidelity Otc

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

By analyzing existing cross correlation between Vanguard Small Cap Index and Fidelity Otc Portfolio, you can compare the effects of market volatilities on Vanguard Small-cap and Fidelity Otc 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 Small-cap with a short position of Fidelity Otc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and Fidelity Otc.

Diversification Opportunities for Vanguard Small-cap and Fidelity Otc

0.95

Correlation Coefficient

Vanguard Small-cap  Fidelity Otc

Almost no diversification

The 3 months correlation between Vanguard and Fidelity is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Index and Fidelity Otc Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Otc Portfolio and Vanguard Small-cap 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 Small Cap Index are associated (or correlated) with Fidelity Otc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Otc Portfolio has no effect on the direction of Vanguard Small-cap i.e., Vanguard Small-cap and Fidelity Otc go up and down completely randomly.

Pair Corralation between Vanguard Small-cap and Fidelity Otc

Assuming the 90 days horizon Vanguard Small Cap Index is expected to generate 0.72 times more return on investment than Fidelity Otc. However, Vanguard Small Cap Index is 1.38 times less risky than Fidelity Otc. It trades about -0.1 of its potential returns per unit of risk. Fidelity Otc Portfolio is currently generating about -0.11 per unit of risk. If you would invest  11,591  in Vanguard Small Cap Index on December 22, 2024 and sell it today you would lose (790.00) from holding Vanguard Small Cap Index or give up 6.82% of portfolio value over 90 days.

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

Vanguard Small Cap Index  vs.  Fidelity Otc Portfolio

Vanguard Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Small Cap Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Fidelity Otc Portfolio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity Otc Portfolio has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Vanguard Small-cap and Fidelity Otc

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

The idea behind Vanguard Small Cap Index and Fidelity Otc Portfolio 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.