Correlation Between Fidelity MSCI and Themes Global

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

By analyzing existing cross correlation between Fidelity MSCI Financials and Themes Global Systemically, you can compare the effects of market volatilities on Fidelity MSCI and Themes Global 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 Themes Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity MSCI and Themes Global.

Diversification Opportunities for Fidelity MSCI and Themes Global

0.92

Correlation Coefficient

Fidelity MSCI  Themes Global

Almost no diversification

The 3 months correlation between Fidelity and Themes is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity MSCI Financials and Themes Global Systemically in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Themes Global System 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 Financials are associated (or correlated) with Themes Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Themes Global System has no effect on the direction of Fidelity MSCI i.e., Fidelity MSCI and Themes Global go up and down completely randomly.

Pair Corralation between Fidelity MSCI and Themes Global

Given the investment horizon of 90 days Fidelity MSCI Financials is expected to generate 1.17 times more return on investment than Themes Global. However, Fidelity MSCI is 1.17 times more volatile than Themes Global Systemically. It trades about 0.18 of its potential returns per unit of risk. Themes Global Systemically is currently generating about 0.16 per unit of risk. If you would invest  6,342  in Fidelity MSCI Financials on September 4, 2024 and sell it today you would earn a total of  919.00  from holding Fidelity MSCI Financials or generate 14.49% return on investment over 90 days.

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

Fidelity MSCI Financials  vs.  Themes Global Systemically

Fidelity MSCI Financials

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity MSCI Financials are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain fundamental indicators, Fidelity MSCI disclosed solid returns over the last few months and may actually be approaching a breakup point.

Themes Global System

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Themes Global Systemically are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain forward indicators, Themes Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Fidelity MSCI and Themes Global

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

The idea behind Fidelity MSCI Financials and Themes Global Systemically 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.