Correlation Between Fidelity International and Vanguard Total

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

Diversification Opportunities for Fidelity International and Vanguard Total

0.99
  Correlation Coefficient

No risk reduction

The 3 months correlation between Fidelity and Vanguard is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding FIDELITY INTERNATIONAL INDEX and VANGUARD TOTAL INTERNATIONAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Inter and Fidelity 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 Fidelity International Index are associated (or correlated) with Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Inter has no effect on the direction of Fidelity International i.e., Fidelity International and Vanguard Total go up and down completely randomly.

Pair Corralation between Fidelity International and Vanguard Total

Assuming the 90 days horizon Fidelity International Index is expected to generate 1.08 times more return on investment than Vanguard Total. However, Fidelity International is 1.08 times more volatile than Vanguard Total International. It trades about 0.04 of its potential returns per unit of risk. Vanguard Total International is currently generating about 0.02 per unit of risk. If you would invest  4,271  in Fidelity International Index on December 30, 2023 and sell it today you would earn a total of  738.00  from holding Fidelity International Index or generate 17.28% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

FIDELITY INTERNATIONAL INDEX  vs.  VANGUARD TOTAL INTERNATIONAL

 Performance 
       Timeline  
Fidelity International 

Risk-Adjusted Performance

14 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity International Index are ranked lower than 14 (%) 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 2024.
Vanguard Total Inter 

Risk-Adjusted Performance

11 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total International are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Vanguard Total is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity International and Vanguard Total Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fidelity International and Vanguard Total

The main advantage of trading using opposite Fidelity International and Vanguard Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity International position performs unexpectedly, Vanguard Total 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 Vanguard Total will offset losses from the drop in Vanguard Total's long position.
The idea behind Fidelity International Index and Vanguard Total 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

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