Correlation Between Fidelity MSCI and Invesco SP
Can any of the company-specific risk be diversified away by investing in both Fidelity MSCI and Invesco SP 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 Invesco SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity MSCI Industrials and Invesco SP 500, you can compare the effects of market volatilities on Fidelity MSCI and Invesco SP 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 Invesco SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity MSCI and Invesco SP.
Diversification Opportunities for Fidelity MSCI and Invesco SP
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Invesco is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity MSCI Industrials and Invesco SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco SP 500 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 Industrials are associated (or correlated) with Invesco SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco SP 500 has no effect on the direction of Fidelity MSCI i.e., Fidelity MSCI and Invesco SP go up and down completely randomly.
Pair Corralation between Fidelity MSCI and Invesco SP
Given the investment horizon of 90 days Fidelity MSCI is expected to generate 1.01 times less return on investment than Invesco SP. But when comparing it to its historical volatility, Fidelity MSCI Industrials is 1.0 times less risky than Invesco SP. It trades about 0.09 of its potential returns per unit of risk. Invesco SP 500 is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,572 in Invesco SP 500 on August 29, 2024 and sell it today you would earn a total of 1,929 from holding Invesco SP 500 or generate 54.0% 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 Industrials vs. Invesco SP 500
Performance |
| Timeline |
| Fidelity MSCI Industrials |
| Invesco SP 500 |
Fidelity MSCI and Invesco SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity MSCI and Invesco SP
The main advantage of trading using opposite Fidelity MSCI and Invesco SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity MSCI position performs unexpectedly, Invesco SP 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 Invesco SP will offset losses from the drop in Invesco SP's long position.| 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |