Correlation Between Fidelity MSCI and VCLO

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

Diversification Opportunities for Fidelity MSCI and VCLO

-0.42

Correlation Coefficient

Fidelity MSCI  VCLO

Very good diversification

The 3 months correlation between Fidelity and VCLO is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity MSCI Information and VCLO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VCLO 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 VCLO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VCLO has no effect on the direction of Fidelity MSCI i.e., Fidelity MSCI and VCLO go up and down completely randomly.

Pair Corralation between Fidelity MSCI and VCLO

If you would invest  18,502  in Fidelity MSCI Information on October 20, 2024 and sell it today you would earn a total of  174.00  from holding Fidelity MSCI Information or generate 0.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	5.0%
Values	Daily Returns

Fidelity MSCI Information  vs.  VCLO

Fidelity MSCI Information

Risk-Adjusted Performance

4 of 100

Insignificant

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

VCLO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VCLO has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, VCLO is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Fidelity MSCI and VCLO

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

The idea behind Fidelity MSCI Information and VCLO 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.