Correlation Between FIDELITY FLEX and VANGUARD TARGET

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

Diversification Opportunities for FIDELITY FLEX and VANGUARD TARGET

0.98
  Correlation Coefficient

Almost no diversification

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

Pair Corralation between FIDELITY FLEX and VANGUARD TARGET

Assuming the 90 days horizon FIDELITY FLEX FREEDOM is expected to generate 0.85 times more return on investment than VANGUARD TARGET. However, FIDELITY FLEX FREEDOM is 1.17 times less risky than VANGUARD TARGET. It trades about 0.0 of its potential returns per unit of risk. VANGUARD TARGET RETIREMENT is currently generating about 0.0 per unit of risk. If you would invest  1,046  in FIDELITY FLEX FREEDOM on September 7, 2022 and sell it today you would lose (5.00)  from holding FIDELITY FLEX FREEDOM or give up 0.48% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

FIDELITY FLEX FREEDOM  vs.  VANGUARD TARGET RETIREMENT

 Performance (%) 
       Timeline  
FIDELITY FLEX FREEDOM 
FIDELITY Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in FIDELITY FLEX FREEDOM are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, FIDELITY FLEX is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

FIDELITY Price Channel

VANGUARD TARGET RETI 
VANGUARD Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in VANGUARD TARGET RETIREMENT 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 TARGET is not utilizing all of its potentials. The new stock price disturbance, may contribute to short-term losses for the investors.

VANGUARD Price Channel

FIDELITY FLEX and VANGUARD TARGET Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with FIDELITY FLEX and VANGUARD TARGET

The main advantage of trading using opposite FIDELITY FLEX and VANGUARD TARGET positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIDELITY FLEX position performs unexpectedly, VANGUARD TARGET 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 TARGET will offset losses from the drop in VANGUARD TARGET's long position.
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The idea behind FIDELITY FLEX FREEDOM and VANGUARD TARGET RETIREMENT 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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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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