Correlation Between SPDR SP and Fidelity MSCI
Can any of the company-specific risk be diversified away by investing in both SPDR SP 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 SPDR SP and Fidelity MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP Bank and Fidelity MSCI Financials, you can compare the effects of market volatilities on SPDR SP 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 SPDR SP with a short position of Fidelity MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Fidelity MSCI.
Diversification Opportunities for SPDR SP and Fidelity MSCI
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPDR and Fidelity is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Bank and Fidelity MSCI Financials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity MSCI Financials and SPDR SP 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 SPDR SP Bank 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 Financials has no effect on the direction of SPDR SP i.e., SPDR SP and Fidelity MSCI go up and down completely randomly.
Pair Corralation between SPDR SP and Fidelity MSCI
Considering the 90-day investment horizon SPDR SP is expected to generate 2.17 times less return on investment than Fidelity MSCI. In addition to that, SPDR SP is 1.85 times more volatile than Fidelity MSCI Financials. It trades about 0.06 of its total potential returns per unit of risk. Fidelity MSCI Financials is currently generating about 0.25 per unit of volatility. If you would invest 7,150 in Fidelity MSCI Financials on November 18, 2024 and sell it today you would earn a total of 210.00 from holding Fidelity MSCI Financials or generate 2.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP Bank vs. Fidelity MSCI Financials
Performance |
| Timeline |
| SPDR SP Bank |
| Fidelity MSCI Financials |
SPDR SP and Fidelity MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Fidelity MSCI
The main advantage of trading using opposite SPDR SP and Fidelity MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP 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.| SPDR SP vs. SPDR SP Regional | SPDR SP vs. SPDR SP Insurance | SPDR SP vs. SPDR SP Retail | SPDR SP vs. SPDR SP Homebuilders |
| Fidelity MSCI vs. Fidelity MSCI Industrials | Fidelity MSCI vs. Fidelity MSCI Health | Fidelity MSCI vs. Fidelity MSCI Materials | 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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