Correlation Between Fidelity MSCI and IShares Financials
Can any of the company-specific risk be diversified away by investing in both Fidelity MSCI and IShares Financials 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 Financials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity MSCI Financials and iShares Financials ETF, you can compare the effects of market volatilities on Fidelity MSCI and IShares Financials 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 Financials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity MSCI and IShares Financials.
Diversification Opportunities for Fidelity MSCI and IShares Financials
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 Financials and iShares Financials ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Financials 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 Financials are associated (or correlated) with IShares Financials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Financials ETF has no effect on the direction of Fidelity MSCI i.e., Fidelity MSCI and IShares Financials go up and down completely randomly.
Pair Corralation between Fidelity MSCI and IShares Financials
Given the investment horizon of 90 days Fidelity MSCI Financials is expected to generate 0.97 times more return on investment than IShares Financials. However, Fidelity MSCI Financials is 1.03 times less risky than IShares Financials. It trades about 0.27 of its potential returns per unit of risk. iShares Financials ETF is currently generating about 0.26 per unit of risk. If you would invest 6,588 in Fidelity MSCI Financials on August 26, 2024 and sell it today you would earn a total of 659.00 from holding Fidelity MSCI Financials or generate 10.0% 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 Financials vs. iShares Financials ETF
Performance |
| Timeline |
| Fidelity MSCI Financials |
| iShares Financials ETF |
Fidelity MSCI and IShares Financials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity MSCI and IShares Financials
The main advantage of trading using opposite Fidelity MSCI and IShares Financials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity MSCI position performs unexpectedly, IShares Financials 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 Financials will offset losses from the drop in IShares Financials' long position.| Fidelity MSCI vs. UBS AG London | Fidelity MSCI vs. UBS AG London | Fidelity MSCI vs. ETRACS Quarterly Pay | Fidelity MSCI vs. ETRACS 2xMonthly Pay |
| IShares Financials vs. UBS AG London | IShares Financials vs. UBS AG London | IShares Financials vs. ETRACS Quarterly Pay | IShares Financials vs. ETRACS 2xMonthly Pay |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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