Correlation Between Select STOXX and Fidelity MSCI
Can any of the company-specific risk be diversified away by investing in both Select STOXX 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 Select STOXX and Fidelity MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Select STOXX Europe and Fidelity MSCI Industrials, you can compare the effects of market volatilities on Select STOXX 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 Select STOXX with a short position of Fidelity MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select STOXX and Fidelity MSCI.
Diversification Opportunities for Select STOXX and Fidelity MSCI
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Select and Fidelity is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Select STOXX Europe and Fidelity MSCI Industrials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity MSCI Industrials and Select STOXX 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 Select STOXX Europe 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 Industrials has no effect on the direction of Select STOXX i.e., Select STOXX and Fidelity MSCI go up and down completely randomly.
Pair Corralation between Select STOXX and Fidelity MSCI
Given the investment horizon of 90 days Select STOXX Europe is expected to generate 0.99 times more return on investment than Fidelity MSCI. However, Select STOXX Europe is 1.01 times less risky than Fidelity MSCI. It trades about 0.44 of its potential returns per unit of risk. Fidelity MSCI Industrials is currently generating about 0.28 per unit of risk. If you would invest 2,440 in Select STOXX Europe on November 3, 2024 and sell it today you would earn a total of 220.00 from holding Select STOXX Europe or generate 9.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Select STOXX Europe vs. Fidelity MSCI Industrials
Performance |
| Timeline |
| Select STOXX Europe |
| Fidelity MSCI Industrials |
Select STOXX and Fidelity MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Select STOXX and Fidelity MSCI
The main advantage of trading using opposite Select STOXX and Fidelity MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select STOXX 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.| Select STOXX vs. Ultimus Managers Trust | Select STOXX vs. American Beacon Select | Select STOXX vs. First Trust Indxx | Select STOXX vs. Direxion Daily SP |
| Fidelity MSCI vs. Fidelity MSCI Materials | Fidelity MSCI vs. Fidelity MSCI Financials | Fidelity MSCI vs. Fidelity MSCI Consumer | Fidelity MSCI vs. Fidelity MSCI Consumer |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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