Correlation Between Fidelity MSCI and Global X

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

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

Diversification Opportunities for Fidelity MSCI and Global X

0.81

Correlation Coefficient

Fidelity MSCI  Global X

Very poor diversification

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

Pair Corralation between Fidelity MSCI and Global X

Given the investment horizon of 90 days Fidelity MSCI Information is expected to generate 0.88 times more return on investment than Global X. However, Fidelity MSCI Information is 1.14 times less risky than Global X. It trades about 0.07 of its potential returns per unit of risk. Global X Funds is currently generating about -0.36 per unit of risk. If you would invest  18,507  in Fidelity MSCI Information on September 12, 2024 and sell it today you would earn a total of  255.00  from holding Fidelity MSCI Information or generate 1.38% return on investment over 90 days.

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

Fidelity MSCI Information  vs.  Global X Funds

Fidelity MSCI Information

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity MSCI Information are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Fidelity MSCI may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Global X Funds

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Funds are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Global X is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Fidelity MSCI and Global X

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

The idea behind Fidelity MSCI Information and Global X Funds 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.