Correlation Between Fidelity Sustainable and VPC Specialty

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

By analyzing existing cross correlation between Fidelity Sustainable USD and VPC Specialty Lending, you can compare the effects of market volatilities on Fidelity Sustainable and VPC Specialty 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 Sustainable with a short position of VPC Specialty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Sustainable and VPC Specialty.

Diversification Opportunities for Fidelity Sustainable and VPC Specialty

0.78

Correlation Coefficient

Fidelity Sustainable  VPC Specialty

Poor diversification

The 3 months correlation between Fidelity and VPC is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Sustainable USD and VPC Specialty Lending in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VPC Specialty Lending and Fidelity Sustainable 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 Sustainable USD are associated (or correlated) with VPC Specialty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VPC Specialty Lending has no effect on the direction of Fidelity Sustainable i.e., Fidelity Sustainable and VPC Specialty go up and down completely randomly.

Pair Corralation between Fidelity Sustainable and VPC Specialty

Assuming the 90 days trading horizon Fidelity Sustainable is expected to generate 3.89 times less return on investment than VPC Specialty. But when comparing it to its historical volatility, Fidelity Sustainable USD is 8.39 times less risky than VPC Specialty. It trades about 0.23 of its potential returns per unit of risk. VPC Specialty Lending is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,275  in VPC Specialty Lending on April 20, 2025 and sell it today you would earn a total of  205.00  from holding VPC Specialty Lending or generate 16.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Fidelity Sustainable USD  vs.  VPC Specialty Lending

Fidelity Sustainable USD

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Sustainable USD are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Fidelity Sustainable is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

VPC Specialty Lending

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VPC Specialty Lending are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, VPC Specialty exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fidelity Sustainable and VPC Specialty

The main advantage of trading using opposite Fidelity Sustainable and VPC Specialty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Sustainable position performs unexpectedly, VPC Specialty 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 VPC Specialty will offset losses from the drop in VPC Specialty's long position.

The idea behind Fidelity Sustainable USD and VPC Specialty Lending 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.