Correlation Between MicroSectors FANG and Fidelity MSCI
Can any of the company-specific risk be diversified away by investing in both MicroSectors FANG and Fidelity 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 MicroSectors FANG and Fidelity MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MicroSectors FANG Index and Fidelity MSCI Real, you can compare the effects of market volatilities on MicroSectors FANG and Fidelity 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 MicroSectors FANG with a short position of Fidelity MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and Fidelity MSCI.
Diversification Opportunities for MicroSectors FANG and Fidelity MSCI
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MicroSectors and Fidelity is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG Index and Fidelity MSCI Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity MSCI Real and MicroSectors FANG 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 MicroSectors FANG Index are associated (or correlated) with Fidelity MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity MSCI Real has no effect on the direction of MicroSectors FANG i.e., MicroSectors FANG and Fidelity MSCI go up and down completely randomly.
Pair Corralation between MicroSectors FANG and Fidelity MSCI
Given the investment horizon of 90 days MicroSectors FANG Index is expected to generate 4.09 times more return on investment than Fidelity MSCI. However, MicroSectors FANG is 4.09 times more volatile than Fidelity MSCI Real. It trades about 0.11 of its potential returns per unit of risk. Fidelity MSCI Real is currently generating about 0.02 per unit of risk. If you would invest 8,835 in MicroSectors FANG Index on November 5, 2024 and sell it today you would earn a total of 53,665 from holding MicroSectors FANG Index or generate 607.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
MicroSectors FANG Index vs. Fidelity MSCI Real
Performance |
| Timeline |
| MicroSectors FANG Index |
| Fidelity MSCI Real |
MicroSectors FANG and Fidelity MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectors FANG and Fidelity MSCI
The main advantage of trading using opposite MicroSectors FANG and Fidelity MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG position performs unexpectedly, Fidelity 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 Fidelity MSCI will offset losses from the drop in Fidelity MSCI's long position.| MicroSectors FANG vs. Direxion Daily Semiconductor | MicroSectors FANG vs. MicroSectors Solactive FANG | MicroSectors FANG vs. MicroSectors FANG Index | MicroSectors FANG vs. Direxion Daily Technology |
| Fidelity MSCI vs. Fidelity MSCI Utilities | Fidelity MSCI vs. Fidelity MSCI Consumer | Fidelity MSCI vs. Fidelity MSCI Materials | Fidelity MSCI vs. Fidelity MSCI Financials |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |