Correlation Between Vanguard Extended and Fidelity Sai

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Can any of the company-specific risk be diversified away by investing in both Vanguard Extended and Fidelity Sai 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 Extended and Fidelity Sai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Extended Duration and Fidelity Sai Long Term, you can compare the effects of market volatilities on Vanguard Extended and Fidelity Sai 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 Extended with a short position of Fidelity Sai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Extended and Fidelity Sai.

Diversification Opportunities for Vanguard Extended and Fidelity Sai

1.0
  Correlation Coefficient

No risk reduction

The 3 months correlation between Vanguard and Fidelity is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Extended Duration and Fidelity Sai Long Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Sai Long and Vanguard Extended 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 Extended Duration are associated (or correlated) with Fidelity Sai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Sai Long has no effect on the direction of Vanguard Extended i.e., Vanguard Extended and Fidelity Sai go up and down completely randomly.

Pair Corralation between Vanguard Extended and Fidelity Sai

Assuming the 90 days horizon Vanguard Extended Duration is expected to generate 1.36 times more return on investment than Fidelity Sai. However, Vanguard Extended is 1.36 times more volatile than Fidelity Sai Long Term. It trades about 0.04 of its potential returns per unit of risk. Fidelity Sai Long Term is currently generating about 0.04 per unit of risk. If you would invest  2,205  in Vanguard Extended Duration on March 16, 2024 and sell it today you would earn a total of  22.00  from holding Vanguard Extended Duration or generate 1.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Vanguard Extended Duration  vs.  Fidelity Sai Long Term

 Performance 
       Timeline  
Vanguard Extended 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Extended Duration are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Vanguard Extended is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Fidelity Sai Long 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Sai Long Term are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fidelity Sai is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vanguard Extended and Fidelity Sai Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vanguard Extended and Fidelity Sai

The main advantage of trading using opposite Vanguard Extended and Fidelity Sai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Extended position performs unexpectedly, Fidelity Sai 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 Sai will offset losses from the drop in Fidelity Sai's long position.
The idea behind Vanguard Extended Duration and Fidelity Sai Long Term 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

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