Correlation Between Fidelity MSCI and Invesco Dynamic

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

Diversification Opportunities for Fidelity MSCI and Invesco Dynamic

0.81

Correlation Coefficient

Fidelity MSCI  Invesco Dynamic

Very poor diversification

The 3 months correlation between Fidelity and Invesco is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity MSCI Consumer and Invesco Dynamic Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Dynamic Leisure 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 Invesco Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Dynamic Leisure has no effect on the direction of Fidelity MSCI i.e., Fidelity MSCI and Invesco Dynamic go up and down completely randomly.

Pair Corralation between Fidelity MSCI and Invesco Dynamic

Given the investment horizon of 90 days Fidelity MSCI Consumer is expected to under-perform the Invesco Dynamic. But the etf apears to be less risky and, when comparing its historical volatility, Fidelity MSCI Consumer is 1.01 times less risky than Invesco Dynamic. The etf trades about -0.16 of its potential returns per unit of risk. The Invesco Dynamic Leisure is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  5,238  in Invesco Dynamic Leisure on December 29, 2024 and sell it today you would lose (368.00) from holding Invesco Dynamic Leisure or give up 7.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

Fidelity MSCI Consumer  vs.  Invesco Dynamic Leisure

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.

Invesco Dynamic Leisure

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco Dynamic Leisure has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Etf's technical and fundamental indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the ETF firm stakeholders.

Pair Trading with Fidelity MSCI and Invesco Dynamic

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

The idea behind Fidelity MSCI Consumer and Invesco Dynamic Leisure 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.