Correlation Between Fidelity MSCI and Consumer Staples
Can any of the company-specific risk be diversified away by investing in both Fidelity MSCI and Consumer Staples 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 Consumer Staples into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity MSCI Consumer and Consumer Staples Select, you can compare the effects of market volatilities on Fidelity MSCI and Consumer Staples 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 Consumer Staples. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity MSCI and Consumer Staples.
Diversification Opportunities for Fidelity MSCI and Consumer Staples
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fidelity and Consumer is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity MSCI Consumer and Consumer Staples Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Staples Select 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 Consumer are associated (or correlated) with Consumer Staples. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Staples Select has no effect on the direction of Fidelity MSCI i.e., Fidelity MSCI and Consumer Staples go up and down completely randomly.
Pair Corralation between Fidelity MSCI and Consumer Staples
Given the investment horizon of 90 days Fidelity MSCI Consumer is expected to generate 0.96 times more return on investment than Consumer Staples. However, Fidelity MSCI Consumer is 1.04 times less risky than Consumer Staples. It trades about 0.2 of its potential returns per unit of risk. Consumer Staples Select is currently generating about 0.09 per unit of risk. If you would invest 5,030 in Fidelity MSCI Consumer on August 28, 2024 and sell it today you would earn a total of 143.00 from holding Fidelity MSCI Consumer or generate 2.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity MSCI Consumer vs. Consumer Staples Select
Performance |
| Timeline |
| Fidelity MSCI Consumer |
| Consumer Staples Select |
Fidelity MSCI and Consumer Staples Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity MSCI and Consumer Staples
The main advantage of trading using opposite Fidelity MSCI and Consumer Staples positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity MSCI position performs unexpectedly, Consumer Staples 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 Consumer Staples will offset losses from the drop in Consumer Staples' long position.| Fidelity MSCI vs. Vanguard Consumer Discretionary | Fidelity MSCI vs. Vanguard Utilities Index | Fidelity MSCI vs. Vanguard Industrials Index | Fidelity MSCI vs. Vanguard Materials Index |
| Consumer Staples vs. Vanguard Consumer Discretionary | Consumer Staples vs. Vanguard Utilities Index | Consumer Staples vs. Vanguard Industrials Index | Consumer Staples vs. Vanguard Materials Index |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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