Correlation Between Fidelity MSCI and Consumer Discretionary
Can any of the company-specific risk be diversified away by investing in both Fidelity MSCI and Consumer Discretionary 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 Discretionary 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 Discretionary Select, you can compare the effects of market volatilities on Fidelity MSCI and Consumer Discretionary 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 Discretionary. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity MSCI and Consumer Discretionary.
Diversification Opportunities for Fidelity MSCI and Consumer Discretionary
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Fidelity and Consumer is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity MSCI Consumer and Consumer Discretionary Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Discretionary 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 Discretionary. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Discretionary has no effect on the direction of Fidelity MSCI i.e., Fidelity MSCI and Consumer Discretionary go up and down completely randomly.
Pair Corralation between Fidelity MSCI and Consumer Discretionary
Given the investment horizon of 90 days Fidelity MSCI is expected to generate 1.3 times less return on investment than Consumer Discretionary. But when comparing it to its historical volatility, Fidelity MSCI Consumer is 1.8 times less risky than Consumer Discretionary. It trades about 0.14 of its potential returns per unit of risk. Consumer Discretionary Select is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 17,178 in Consumer Discretionary Select on September 3, 2024 and sell it today you would earn a total of 5,246 from holding Consumer Discretionary Select or generate 30.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity MSCI Consumer vs. Consumer Discretionary Select
Performance |
| Timeline |
| Fidelity MSCI Consumer |
| Consumer Discretionary |
Fidelity MSCI and Consumer Discretionary Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity MSCI and Consumer Discretionary
The main advantage of trading using opposite Fidelity MSCI and Consumer Discretionary positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity MSCI position performs unexpectedly, Consumer Discretionary 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 Discretionary will offset losses from the drop in Consumer Discretionary's long position.| Fidelity MSCI vs. Fidelity MSCI Utilities | Fidelity MSCI vs. Fidelity MSCI Industrials | Fidelity MSCI vs. Fidelity MSCI Materials | Fidelity MSCI vs. Fidelity MSCI Consumer |
| Consumer Discretionary vs. Consumer Staples Select | Consumer Discretionary vs. Industrial Select Sector | Consumer Discretionary vs. Materials Select Sector | Consumer Discretionary vs. Health Care Select |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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