Correlation Between Fidelity MSCI and Columbia Emerging

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

By analyzing existing cross correlation between Fidelity MSCI Consumer and Columbia Emerging Markets, you can compare the effects of market volatilities on Fidelity MSCI and Columbia Emerging 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 MSCI with a short position of Columbia Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity MSCI and Columbia Emerging.

Diversification Opportunities for Fidelity MSCI and Columbia Emerging

-0.76

Correlation Coefficient

Fidelity MSCI  Columbia Emerging

Pay attention - limited upside

The 3 months correlation between Fidelity and Columbia is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity MSCI Consumer and Columbia Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Emerging Markets and Fidelity MSCI 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 MSCI Consumer are associated (or correlated) with Columbia Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Emerging Markets has no effect on the direction of Fidelity MSCI i.e., Fidelity MSCI and Columbia Emerging go up and down completely randomly.

Pair Corralation between Fidelity MSCI and Columbia Emerging

Given the investment horizon of 90 days Fidelity MSCI Consumer is expected to generate 1.25 times more return on investment than Columbia Emerging. However, Fidelity MSCI is 1.25 times more volatile than Columbia Emerging Markets. It trades about 0.11 of its potential returns per unit of risk. Columbia Emerging Markets is currently generating about 0.01 per unit of risk. If you would invest  5,589  in Fidelity MSCI Consumer on September 26, 2024 and sell it today you would earn a total of  4,599  from holding Fidelity MSCI Consumer or generate 82.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Fidelity MSCI Consumer  vs.  Columbia Emerging Markets

Fidelity MSCI Consumer

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity MSCI Consumer are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward indicators, Fidelity MSCI unveiled solid returns over the last few months and may actually be approaching a breakup point.

Columbia Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Columbia Emerging Markets has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with Fidelity MSCI and Columbia Emerging

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

The idea behind Fidelity MSCI Consumer and Columbia Emerging Markets 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.