Correlation Between IShares Utilities and Fidelity MSCI

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

By analyzing existing cross correlation between iShares Utilities ETF and Fidelity MSCI Utilities, you can compare the effects of market volatilities on IShares Utilities and Fidelity MSCI 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 IShares Utilities with a short position of Fidelity MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Utilities and Fidelity MSCI.

Diversification Opportunities for IShares Utilities and Fidelity MSCI

0.99

Correlation Coefficient

IShares Utilities  Fidelity MSCI

No risk reduction

The 3 months correlation between IShares and Fidelity is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding iShares Utilities ETF and Fidelity MSCI Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity MSCI Utilities and IShares Utilities 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 iShares Utilities ETF are associated (or correlated) with Fidelity MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity MSCI Utilities has no effect on the direction of IShares Utilities i.e., IShares Utilities and Fidelity MSCI go up and down completely randomly.

Pair Corralation between IShares Utilities and Fidelity MSCI

Considering the 90-day investment horizon iShares Utilities ETF is expected to generate 0.95 times more return on investment than Fidelity MSCI. However, iShares Utilities ETF is 1.05 times less risky than Fidelity MSCI. It trades about 0.06 of its potential returns per unit of risk. Fidelity MSCI Utilities is currently generating about 0.04 per unit of risk. If you would invest  9,647  in iShares Utilities ETF on December 26, 2024 and sell it today you would earn a total of  314.00  from holding iShares Utilities ETF or generate 3.25% return on investment over 90 days.

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

iShares Utilities ETF  vs.  Fidelity MSCI Utilities

iShares Utilities ETF

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Utilities ETF are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, IShares Utilities is not utilizing all of its potentials. The new stock price uproar, may contribute to short-horizon losses for the private investors.

Fidelity MSCI Utilities

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity MSCI Utilities are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Fidelity MSCI is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IShares Utilities and Fidelity MSCI

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

The idea behind iShares Utilities ETF and Fidelity MSCI Utilities 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.