Correlation Between Vanguard Total and Fidelity International

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

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

Diversification Opportunities for Vanguard Total and Fidelity International

0.99

Correlation Coefficient

Vanguard Total  Fidelity International

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 Total International and Fidelity International Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity International and Vanguard Total 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 Total International are associated (or correlated) with Fidelity International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity International has no effect on the direction of Vanguard Total i.e., Vanguard Total and Fidelity International go up and down completely randomly.

Pair Corralation between Vanguard Total and Fidelity International

Assuming the 90 days horizon Vanguard Total is expected to generate 1.42 times less return on investment than Fidelity International. But when comparing it to its historical volatility, Vanguard Total International is 1.03 times less risky than Fidelity International. It trades about 0.12 of its potential returns per unit of risk. Fidelity International Index is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  4,760  in Fidelity International Index on December 30, 2024 and sell it today you would earn a total of  428.00  from holding Fidelity International Index or generate 8.99% return on investment over 90 days.

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

Vanguard Total International  vs.  Fidelity International Index

Vanguard Total Inter

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total International are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Total may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Fidelity International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity International Index are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Fidelity International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Vanguard Total and Fidelity International

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

The idea behind Vanguard Total International and Fidelity International Index 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 Global Correlations module to find global opportunities by holding instruments from different markets.