Correlation Between Fidelity MSCI and IShares Energy
Can any of the company-specific risk be diversified away by investing in both Fidelity MSCI and IShares Energy 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 MSCI and IShares Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity MSCI Energy and iShares Energy ETF, you can compare the effects of market volatilities on Fidelity MSCI and IShares Energy 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 MSCI with a short position of IShares Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity MSCI and IShares Energy.
Diversification Opportunities for Fidelity MSCI and IShares Energy
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Fidelity and IShares is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity MSCI Energy and iShares Energy ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Energy ETF and Fidelity MSCI 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 MSCI Energy are associated (or correlated) with IShares Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Energy ETF has no effect on the direction of Fidelity MSCI i.e., Fidelity MSCI and IShares Energy go up and down completely randomly.
Pair Corralation between Fidelity MSCI and IShares Energy
Given the investment horizon of 90 days Fidelity MSCI Energy is expected to generate 1.1 times more return on investment than IShares Energy. However, Fidelity MSCI is 1.1 times more volatile than iShares Energy ETF. It trades about 0.32 of its potential returns per unit of risk. iShares Energy ETF is currently generating about 0.33 per unit of risk. If you would invest 2,473 in Fidelity MSCI Energy on August 23, 2024 and sell it today you would earn a total of 207.00 from holding Fidelity MSCI Energy or generate 8.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity MSCI Energy vs. iShares Energy ETF
Performance |
| Timeline |
| Fidelity MSCI Energy |
| iShares Energy ETF |
Fidelity MSCI and IShares Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity MSCI and IShares Energy
The main advantage of trading using opposite Fidelity MSCI and IShares Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity MSCI position performs unexpectedly, IShares Energy 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 Energy will offset losses from the drop in IShares Energy's long position.| Fidelity MSCI vs. Fidelity MSCI Financials | Fidelity MSCI vs. Fidelity MSCI Utilities | Fidelity MSCI vs. Fidelity MSCI Health | Fidelity MSCI vs. Fidelity MSCI Consumer |
| IShares Energy vs. First Trust Exchange Traded | IShares Energy vs. First Trust SMID | IShares Energy vs. First Trust TCW | IShares Energy vs. First Trust TCW |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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