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 Information, 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

0.94

Correlation Coefficient

Fidelity MSCI  Fidelity MSCI

Almost no diversification

The 3 months correlation between Fidelity and Fidelity is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity MSCI Consumer and Fidelity MSCI Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity MSCI Information 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 Information 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 under-perform the Fidelity MSCI. But the etf apears to be less risky and, when comparing its historical volatility, Fidelity MSCI Consumer is 1.19 times less risky than Fidelity MSCI. The etf trades about -0.15 of its potential returns per unit of risk. The Fidelity MSCI Information is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  18,648  in Fidelity MSCI Information on December 30, 2024 and sell it today you would lose (2,497) from holding Fidelity MSCI Information or give up 13.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Fidelity MSCI Consumer  vs.  Fidelity MSCI Information

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 weak performance in the last few months, the Etf's forward indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Fidelity MSCI Information

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity MSCI Information has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Etf's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

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 Information 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.