Correlation Between Xtrackers MSCI and Fidelity International
Can any of the company-specific risk be diversified away by investing in both Xtrackers MSCI and Fidelity International 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 Xtrackers MSCI and Fidelity International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers MSCI EAFE and Fidelity International High, you can compare the effects of market volatilities on Xtrackers MSCI and Fidelity International 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 Xtrackers MSCI with a short position of Fidelity International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers MSCI and Fidelity International.
Diversification Opportunities for Xtrackers MSCI and Fidelity International
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Xtrackers and Fidelity is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers MSCI EAFE and Fidelity International High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity International and Xtrackers 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 Xtrackers MSCI EAFE are associated (or correlated) with Fidelity International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity International has no effect on the direction of Xtrackers MSCI i.e., Xtrackers MSCI and Fidelity International go up and down completely randomly.
Pair Corralation between Xtrackers MSCI and Fidelity International
Given the investment horizon of 90 days Xtrackers MSCI EAFE is expected to under-perform the Fidelity International. In addition to that, Xtrackers MSCI is 1.1 times more volatile than Fidelity International High. It trades about -0.18 of its total potential returns per unit of risk. Fidelity International High is currently generating about -0.17 per unit of volatility. If you would invest 2,088 in Fidelity International High on August 25, 2024 and sell it today you would lose (64.00) from holding Fidelity International High or give up 3.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers MSCI EAFE vs. Fidelity International High
Performance |
| Timeline |
| Xtrackers MSCI EAFE |
| Fidelity International |
Xtrackers MSCI and Fidelity International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers MSCI and Fidelity International
The main advantage of trading using opposite Xtrackers MSCI and Fidelity International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers MSCI position performs unexpectedly, Fidelity International 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 International will offset losses from the drop in Fidelity International's long position.| Xtrackers MSCI vs. Dimensional Targeted Value | Xtrackers MSCI vs. Dimensional Small Cap | Xtrackers MSCI vs. Dimensional Marketwide Value | Xtrackers MSCI vs. Dimensional Core Equity |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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