Correlation Between IShares ESG and Fidelity International

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Can any of the company-specific risk be diversified away by investing in both IShares ESG and Fidelity International 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 ESG and Fidelity International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares ESG Aware and Fidelity International Multifactor, you can compare the effects of market volatilities on IShares ESG and Fidelity International 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 ESG with a short position of Fidelity International. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares ESG and Fidelity International.

Diversification Opportunities for IShares ESG and Fidelity International

0.98
  Correlation Coefficient

Almost no diversification

The 3 months correlation between IShares and Fidelity is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Aware and Fidelity International Multifa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity International and IShares ESG 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 ESG Aware are associated (or correlated) with Fidelity International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity International has no effect on the direction of IShares ESG i.e., IShares ESG and Fidelity International go up and down completely randomly.

Pair Corralation between IShares ESG and Fidelity International

Given the investment horizon of 90 days iShares ESG Aware is expected to under-perform the Fidelity International. In addition to that, IShares ESG is 1.28 times more volatile than Fidelity International Multifactor. It trades about -0.21 of its total potential returns per unit of risk. Fidelity International Multifactor is currently generating about -0.15 per unit of volatility. If you would invest  2,860  in Fidelity International Multifactor on August 29, 2024 and sell it today you would lose (58.00) from holding Fidelity International Multifactor or give up 2.03% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

iShares ESG Aware  vs.  Fidelity International Multifa

 Performance 
       Timeline  
iShares ESG Aware 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days iShares ESG Aware has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.
Fidelity International 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Fidelity International Multifactor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Fidelity International is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

IShares ESG and Fidelity International Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with IShares ESG and Fidelity International

The main advantage of trading using opposite IShares ESG and Fidelity International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares ESG position performs unexpectedly, Fidelity International 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 International will offset losses from the drop in Fidelity International's long position.
The idea behind iShares ESG Aware and Fidelity International Multifactor 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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