Correlation Between IShares Core and Fidelity Value

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

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

Diversification Opportunities for IShares Core and Fidelity Value

0.91

Correlation Coefficient

IShares Core  Fidelity Value

Almost no diversification

The 3 months correlation between IShares and Fidelity is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and Fidelity Value ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Value ETF and IShares Core 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 Core SP are associated (or correlated) with Fidelity Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Value ETF has no effect on the direction of IShares Core i.e., IShares Core and Fidelity Value go up and down completely randomly.

Pair Corralation between IShares Core and Fidelity Value

Assuming the 90 days trading horizon IShares Core is expected to generate 1.15 times less return on investment than Fidelity Value. In addition to that, IShares Core is 1.02 times more volatile than Fidelity Value ETF. It trades about 0.11 of its total potential returns per unit of risk. Fidelity Value ETF is currently generating about 0.12 per unit of volatility. If you would invest  1,270  in Fidelity Value ETF on October 11, 2024 and sell it today you would earn a total of  746.00  from holding Fidelity Value ETF or generate 58.74% return on investment over 90 days.

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

iShares Core SP  vs.  Fidelity Value ETF

iShares Core SP

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SP are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, IShares Core is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Fidelity Value ETF

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Value ETF are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Fidelity Value may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with IShares Core and Fidelity Value

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

The idea behind iShares Core SP and Fidelity Value ETF 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.