Correlation Between Vanguard International and Fidelity Series

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

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

Diversification Opportunities for Vanguard International and Fidelity Series

0.84

Correlation Coefficient

Vanguard International  Fidelity Series

Very poor diversification

The 3 months correlation between Vanguard and Fidelity is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard International Value and Fidelity Series International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Series Inte and Vanguard International 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 International 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 Inte has no effect on the direction of Vanguard International i.e., Vanguard International and Fidelity Series go up and down completely randomly.

Pair Corralation between Vanguard International and Fidelity Series

Assuming the 90 days horizon Vanguard International Value is expected to generate 1.07 times more return on investment than Fidelity Series. However, Vanguard International is 1.07 times more volatile than Fidelity Series International. It trades about 0.0 of its potential returns per unit of risk. Fidelity Series International is currently generating about -0.03 per unit of risk. If you would invest  4,266  in Vanguard International Value on September 12, 2024 and sell it today you would earn a total of  1.00  from holding Vanguard International Value or generate 0.02% return on investment over 90 days.

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

Vanguard International Value  vs.  Fidelity Series International

Vanguard International

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Vanguard International Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Vanguard International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Series Inte

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Series International has generated negative risk-adjusted returns adding no value to fund investors. 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 Vanguard International and Fidelity Series

The main advantage of trading using opposite Vanguard International and Fidelity Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard International 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 Vanguard International Value and Fidelity Series International 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.