Correlation Between Fidelity MSCI and Fidelity MSCI

Can any of the company-specific risk be diversified away by investing in both Fidelity MSCI and Fidelity MSCI 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 Fidelity MSCI 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 Fidelity MSCI Consumer, you can compare the effects of market volatilities on Fidelity MSCI and Fidelity MSCI 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 Fidelity MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity MSCI and Fidelity MSCI.

Diversification Opportunities for Fidelity MSCI and Fidelity MSCI

-0.17

Correlation Coefficient

Fidelity MSCI  Fidelity MSCI

Good diversification

The 3 months correlation between Fidelity and Fidelity is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity MSCI Consumer and Fidelity MSCI Consumer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity MSCI Consumer 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 Fidelity MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity MSCI Consumer has no effect on the direction of Fidelity MSCI i.e., Fidelity MSCI and Fidelity MSCI go up and down completely randomly.

Pair Corralation between Fidelity MSCI and Fidelity MSCI

Given the investment horizon of 90 days Fidelity MSCI Consumer is expected to generate 1.74 times more return on investment than Fidelity MSCI. However, Fidelity MSCI is 1.74 times more volatile than Fidelity MSCI Consumer. It trades about 0.06 of its potential returns per unit of risk. Fidelity MSCI Consumer is currently generating about 0.08 per unit of risk. If you would invest  7,418  in Fidelity MSCI Consumer on December 2, 2024 and sell it today you would earn a total of  1,878  from holding Fidelity MSCI Consumer or generate 25.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Fidelity MSCI Consumer  vs.  Fidelity MSCI Consumer

Fidelity MSCI Consumer

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity MSCI Consumer has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Fidelity MSCI is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Fidelity MSCI Consumer

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity MSCI Consumer are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Fidelity MSCI is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fidelity MSCI and Fidelity MSCI

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

The idea behind Fidelity MSCI Consumer and Fidelity MSCI Consumer 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.

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 the Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.