Correlation Between Fabwx and Vanguard Total

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

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

Diversification Opportunities for Fabwx and Vanguard Total

0.97

Correlation Coefficient

Fabwx  Vanguard Total

Almost no diversification

The 3 months correlation between Fabwx and Vanguard is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Fabwx 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 Fabwx 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 Fabwx 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 Fabwx i.e., Fabwx and Vanguard Total go up and down completely randomly.

Pair Corralation between Fabwx and Vanguard Total

Assuming the 90 days horizon Fabwx is expected to generate 1.07 times more return on investment than Vanguard Total. However, Fabwx is 1.07 times more volatile than Vanguard Total International. It trades about 0.28 of its potential returns per unit of risk. Vanguard Total International is currently generating about 0.14 per unit of risk. If you would invest  1,445  in Fabwx on May 5, 2025 and sell it today you would earn a total of  183.00  from holding Fabwx or generate 12.66% return on investment over 90 days.

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

Fabwx  vs.  Vanguard Total International

Fabwx

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fabwx are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Fabwx may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Vanguard Total Inter

Risk-Adjusted Performance

Good

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.

Pair Trading with Fabwx and Vanguard Total

The main advantage of trading using opposite Fabwx and Vanguard Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fabwx 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 Fabwx 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.