Correlation Between IShares Emergent and Fidelity Crypto

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

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

Diversification Opportunities for IShares Emergent and Fidelity Crypto

0.0

Correlation Coefficient

IShares Emergent  Fidelity Crypto

Pay attention - limited upside

The 3 months correlation between IShares and Fidelity is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares Emergent Food and Fidelity Crypto Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Crypto Industry and IShares Emergent 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 Emergent Food are associated (or correlated) with Fidelity Crypto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Crypto Industry has no effect on the direction of IShares Emergent i.e., IShares Emergent and Fidelity Crypto go up and down completely randomly.

Pair Corralation between IShares Emergent and Fidelity Crypto

Given the investment horizon of 90 days iShares Emergent Food is expected to under-perform the Fidelity Crypto. But the etf apears to be less risky and, when comparing its historical volatility, iShares Emergent Food is 5.77 times less risky than Fidelity Crypto. The etf trades about -0.05 of its potential returns per unit of risk. The Fidelity Crypto Industry is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,674  in Fidelity Crypto Industry on September 22, 2024 and sell it today you would earn a total of  831.00  from holding Fidelity Crypto Industry or generate 31.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

iShares Emergent Food  vs.  Fidelity Crypto Industry

iShares Emergent Food

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Emergent Food has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, IShares Emergent is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Fidelity Crypto Industry

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Crypto Industry are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady forward indicators, Fidelity Crypto reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Emergent and Fidelity Crypto

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

The idea behind iShares Emergent Food and Fidelity Crypto Industry 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.