Correlation Between Fidelity MSCI and Vanguard Information

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

Diversification Opportunities for Fidelity MSCI and Vanguard Information

1.0

Correlation Coefficient

Fidelity MSCI  Vanguard Information

No risk reduction

The 3 months correlation between Fidelity and Vanguard is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity MSCI Information and Vanguard Information Technolog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Information 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 Vanguard Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Information has no effect on the direction of Fidelity MSCI i.e., Fidelity MSCI and Vanguard Information go up and down completely randomly.

Pair Corralation between Fidelity MSCI and Vanguard Information

Given the investment horizon of 90 days Fidelity MSCI Information is expected to under-perform the Vanguard Information. In addition to that, Fidelity MSCI is 1.01 times more volatile than Vanguard Information Technology. It trades about -0.12 of its total potential returns per unit of risk. Vanguard Information Technology is currently generating about -0.12 per unit of volatility. If you would invest  62,677  in Vanguard Information Technology on December 29, 2024 and sell it today you would lose (8,353) from holding Vanguard Information Technology or give up 13.33% of portfolio value over 90 days.

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

Fidelity MSCI Information  vs.  Vanguard Information Technolog

Fidelity MSCI Information

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity MSCI Information has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Etf's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Vanguard Information

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Information Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's technical and fundamental 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.

Pair Trading with Fidelity MSCI and Vanguard Information

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

The idea behind Fidelity MSCI Information and Vanguard Information Technology 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.