Correlation Between IShares Energy and Fidelity MSCI
Can any of the company-specific risk be diversified away by investing in both IShares Energy 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 IShares Energy and Fidelity MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Energy ETF and Fidelity MSCI Energy, you can compare the effects of market volatilities on IShares Energy 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 IShares Energy with a short position of Fidelity MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Energy and Fidelity MSCI.
Diversification Opportunities for IShares Energy and Fidelity MSCI
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and Fidelity is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares Energy ETF and Fidelity MSCI Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity MSCI Energy and IShares Energy 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 iShares Energy ETF 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 Energy has no effect on the direction of IShares Energy i.e., IShares Energy and Fidelity MSCI go up and down completely randomly.
Pair Corralation between IShares Energy and Fidelity MSCI
Considering the 90-day investment horizon IShares Energy is expected to generate 1.02 times less return on investment than Fidelity MSCI. But when comparing it to its historical volatility, iShares Energy ETF is 1.1 times less risky than Fidelity MSCI. It trades about 0.36 of its potential returns per unit of risk. Fidelity MSCI Energy is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 2,414 in Fidelity MSCI Energy on August 30, 2024 and sell it today you would earn a total of 216.00 from holding Fidelity MSCI Energy or generate 8.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Energy ETF vs. Fidelity MSCI Energy
Performance |
| Timeline |
| iShares Energy ETF |
| Fidelity MSCI Energy |
IShares Energy and Fidelity MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Energy and Fidelity MSCI
The main advantage of trading using opposite IShares Energy and Fidelity MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Energy 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.| IShares Energy vs. iShares Basic Materials | IShares Energy vs. iShares Utilities ETF | IShares Energy vs. iShares Financials ETF | IShares Energy vs. iShares Healthcare ETF |
| Fidelity MSCI vs. Fidelity MSCI Financials | Fidelity MSCI vs. Fidelity MSCI Utilities | Fidelity MSCI vs. Fidelity MSCI Health | Fidelity MSCI vs. Fidelity MSCI Consumer |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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