Correlation Between Fidelity MSCI and SPDR SP
Can any of the company-specific risk be diversified away by investing in both Fidelity MSCI and SPDR 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 SPDR SP 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 SPDR SP Bank, you can compare the effects of market volatilities on Fidelity MSCI and SPDR 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 SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity MSCI and SPDR SP.
Diversification Opportunities for Fidelity MSCI and SPDR SP
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Fidelity and SPDR is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity MSCI Financials and SPDR SP Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Bank 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 SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Bank has no effect on the direction of Fidelity MSCI i.e., Fidelity MSCI and SPDR SP go up and down completely randomly.
Pair Corralation between Fidelity MSCI and SPDR SP
Given the investment horizon of 90 days Fidelity MSCI is expected to generate 1.19 times less return on investment than SPDR SP. But when comparing it to its historical volatility, Fidelity MSCI Financials is 1.84 times less risky than SPDR SP. It trades about 0.15 of its potential returns per unit of risk. SPDR SP Bank is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,587 in SPDR SP Bank on September 1, 2024 and sell it today you would earn a total of 2,597 from holding SPDR SP Bank or generate 72.4% 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. SPDR SP Bank
Performance |
| Timeline |
| Fidelity MSCI Financials |
| SPDR SP Bank |
Fidelity MSCI and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity MSCI and SPDR SP
The main advantage of trading using opposite Fidelity MSCI and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity MSCI position performs unexpectedly, SPDR 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 SPDR SP will offset losses from the drop in SPDR SP's long position.| Fidelity MSCI vs. Fidelity MSCI Industrials | Fidelity MSCI vs. Fidelity MSCI Health | Fidelity MSCI vs. Fidelity MSCI Materials | Fidelity MSCI vs. Fidelity MSCI Consumer |
| SPDR SP vs. SPDR SP Regional | SPDR SP vs. SPDR SP Insurance | SPDR SP vs. SPDR SP Retail | SPDR SP vs. SPDR SP Homebuilders |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |