Correlation Between First Trust and Fidelity MSCI
Can any of the company-specific risk be diversified away by investing in both First Trust 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 First Trust and Fidelity MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Exchange Traded and Fidelity MSCI Industrials, you can compare the effects of market volatilities on First Trust 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 First Trust with a short position of Fidelity MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Fidelity MSCI.
Diversification Opportunities for First Trust and Fidelity MSCI
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Fidelity is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Exchange Traded and Fidelity MSCI Industrials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity MSCI Industrials and First Trust 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 First Trust Exchange Traded 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 Industrials has no effect on the direction of First Trust i.e., First Trust and Fidelity MSCI go up and down completely randomly.
Pair Corralation between First Trust and Fidelity MSCI
Given the investment horizon of 90 days First Trust Exchange Traded is expected to generate 1.33 times more return on investment than Fidelity MSCI. However, First Trust is 1.33 times more volatile than Fidelity MSCI Industrials. It trades about 0.08 of its potential returns per unit of risk. Fidelity MSCI Industrials is currently generating about 0.1 per unit of risk. If you would invest 2,197 in First Trust Exchange Traded on August 27, 2024 and sell it today you would earn a total of 419.00 from holding First Trust Exchange Traded or generate 19.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Exchange Traded vs. Fidelity MSCI Industrials
Performance |
| Timeline |
| First Trust Exchange |
| Fidelity MSCI Industrials |
First Trust and Fidelity MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Fidelity MSCI
The main advantage of trading using opposite First Trust and Fidelity MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust 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.| First Trust vs. Invesco Dynamic Large | First Trust vs. Perella Weinberg Partners | First Trust vs. HUMANA INC | First Trust vs. Aquagold International |
| Fidelity MSCI vs. Gabelli ETFs Trust | Fidelity MSCI vs. First Trust Exchange Traded | Fidelity MSCI vs. Northern Lights | Fidelity MSCI vs. First Trust Exchange Traded |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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