Correlation Between Fidelity MSCI and Vanguard Utilities
Can any of the company-specific risk be diversified away by investing in both Fidelity MSCI and Vanguard Utilities 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 Vanguard Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity MSCI Utilities and Vanguard Utilities Index, you can compare the effects of market volatilities on Fidelity MSCI and Vanguard Utilities 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 Vanguard Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity MSCI and Vanguard Utilities.
Diversification Opportunities for Fidelity MSCI and Vanguard Utilities
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Fidelity and Vanguard is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity MSCI Utilities and Vanguard Utilities Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Utilities Index 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 Utilities are associated (or correlated) with Vanguard Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Utilities Index has no effect on the direction of Fidelity MSCI i.e., Fidelity MSCI and Vanguard Utilities go up and down completely randomly.
Pair Corralation between Fidelity MSCI and Vanguard Utilities
Given the investment horizon of 90 days Fidelity MSCI is expected to generate 1.02 times less return on investment than Vanguard Utilities. In addition to that, Fidelity MSCI is 1.0 times more volatile than Vanguard Utilities Index. It trades about 0.11 of its total potential returns per unit of risk. Vanguard Utilities Index is currently generating about 0.11 per unit of volatility. If you would invest 17,425 in Vanguard Utilities Index on August 28, 2024 and sell it today you would earn a total of 467.00 from holding Vanguard Utilities Index or generate 2.68% 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 Utilities vs. Vanguard Utilities Index
Performance |
| Timeline |
| Fidelity MSCI Utilities |
| Vanguard Utilities Index |
Fidelity MSCI and Vanguard Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity MSCI and Vanguard Utilities
The main advantage of trading using opposite Fidelity MSCI and Vanguard Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity MSCI position performs unexpectedly, Vanguard Utilities 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 Vanguard Utilities will offset losses from the drop in Vanguard Utilities' long position.| Fidelity MSCI vs. Global X CleanTech | Fidelity MSCI vs. Global X Clean | Fidelity MSCI vs. Global X Wind | Fidelity MSCI vs. Global X Thematic |
| Vanguard Utilities vs. Vanguard Consumer Staples | Vanguard Utilities vs. Vanguard Materials Index | Vanguard Utilities vs. Vanguard Communication Services | Vanguard Utilities vs. Vanguard Financials 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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