Correlation Between Fidelity MSCI and IShares Genomics

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

By analyzing existing cross correlation between Fidelity MSCI Health and iShares Genomics Immunology, you can compare the effects of market volatilities on Fidelity MSCI and IShares Genomics 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 IShares Genomics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity MSCI and IShares Genomics.

Diversification Opportunities for Fidelity MSCI and IShares Genomics

0.08

Correlation Coefficient

Fidelity MSCI  IShares Genomics

Significant diversification

The 3 months correlation between Fidelity and IShares is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity MSCI Health and iShares Genomics Immunology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Genomics Imm 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 Health are associated (or correlated) with IShares Genomics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Genomics Imm has no effect on the direction of Fidelity MSCI i.e., Fidelity MSCI and IShares Genomics go up and down completely randomly.

Pair Corralation between Fidelity MSCI and IShares Genomics

Given the investment horizon of 90 days Fidelity MSCI Health is expected to generate 0.56 times more return on investment than IShares Genomics. However, Fidelity MSCI Health is 1.77 times less risky than IShares Genomics. It trades about 0.07 of its potential returns per unit of risk. iShares Genomics Immunology is currently generating about -0.09 per unit of risk. If you would invest  6,585  in Fidelity MSCI Health on December 27, 2024 and sell it today you would earn a total of  205.00  from holding Fidelity MSCI Health or generate 3.11% return on investment over 90 days.

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

Fidelity MSCI Health  vs.  iShares Genomics Immunology

Fidelity MSCI Health

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity MSCI Health are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Fidelity MSCI is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

iShares Genomics Imm

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Genomics Immunology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with Fidelity MSCI and IShares Genomics

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

The idea behind Fidelity MSCI Health and iShares Genomics Immunology 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.