Correlation Between Fidelity Consumer and Vaneck Retail

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

Diversification Opportunities for Fidelity Consumer and Vaneck Retail

0.98
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Fidelity and Vaneck is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Consumer Disc and Vaneck Retail ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vaneck Retail ETF and Fidelity Consumer 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 Consumer Disc are associated (or correlated) with Vaneck Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vaneck Retail ETF has no effect on the direction of Fidelity Consumer i.e., Fidelity Consumer and Vaneck Retail go up and down completely randomly.

Pair Corralation between Fidelity Consumer and Vaneck Retail

Given the investment horizon of 90 days Fidelity Consumer Disc is expected to under-perform the Vaneck Retail. In addition to that, Fidelity Consumer is 1.35 times more volatile than Vaneck Retail ETF. It trades about -0.06 of its total potential returns per unit of risk. Vaneck Retail ETF is currently generating about -0.04 per unit of volatility. If you would invest  18,649  in Vaneck Retail ETF on June 26, 2022 and sell it today you would lose (3,055)  from holding Vaneck Retail ETF or give up 16.38% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Fidelity Consumer Disc  vs.  Vaneck Retail ETF

 Performance (%) 
       Timeline  
Fidelity Consumer Disc 
Fidelity Performance
0 of 100
Over the last 90 days Fidelity Consumer Disc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, Fidelity Consumer is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Fidelity Price Channel

Vaneck Retail ETF 
Vaneck Performance
0 of 100
Over the last 90 days Vaneck Retail ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Vaneck Retail is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Vaneck Price Channel

Fidelity Consumer and Vaneck Retail Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fidelity Consumer and Vaneck Retail

The main advantage of trading using opposite Fidelity Consumer and Vaneck Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Consumer position performs unexpectedly, Vaneck Retail 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 Vaneck Retail will offset losses from the drop in Vaneck Retail's long position.
Fidelity Consumer vs. Caterpillar
The idea behind Fidelity Consumer Disc and Vaneck Retail ETF 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.
Vaneck Retail vs. Caterpillar
Check out your portfolio center. 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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