Correlation Between Fidelity Blue and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both Fidelity Blue and IShares 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 Fidelity Blue and IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Blue Chip and iShares MSCI USA, you can compare the effects of market volatilities on Fidelity Blue and IShares 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 Fidelity Blue with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Blue and IShares MSCI.
Diversification Opportunities for Fidelity Blue and IShares MSCI
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fidelity and IShares is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Blue Chip and iShares MSCI USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI USA and Fidelity Blue 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 Fidelity Blue Chip are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI USA has no effect on the direction of Fidelity Blue i.e., Fidelity Blue and IShares MSCI go up and down completely randomly.
Pair Corralation between Fidelity Blue and IShares MSCI
Given the investment horizon of 90 days Fidelity Blue is expected to generate 1.03 times less return on investment than IShares MSCI. In addition to that, Fidelity Blue is 2.43 times more volatile than iShares MSCI USA. It trades about 0.08 of its total potential returns per unit of risk. iShares MSCI USA is currently generating about 0.21 per unit of volatility. If you would invest 8,191 in iShares MSCI USA on September 1, 2024 and sell it today you would earn a total of 1,264 from holding iShares MSCI USA or generate 15.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Blue Chip vs. iShares MSCI USA
Performance |
| Timeline |
| Fidelity Blue Chip |
| iShares MSCI USA |
Fidelity Blue and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Blue and IShares MSCI
The main advantage of trading using opposite Fidelity Blue and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Blue position performs unexpectedly, IShares 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 IShares MSCI will offset losses from the drop in IShares MSCI's long position.The idea behind Fidelity Blue Chip and iShares MSCI USA 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.| IShares MSCI vs. Vanguard Total Stock | IShares MSCI vs. SPDR SP 500 | IShares MSCI vs. iShares Core SP | IShares MSCI vs. Vanguard Dividend Appreciation |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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