Correlation Between Northern Lights and Fidelity MSCI
Can any of the company-specific risk be diversified away by investing in both Northern Lights 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 Northern Lights and Fidelity MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Lights and Fidelity MSCI Industrials, you can compare the effects of market volatilities on Northern Lights 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 Northern Lights with a short position of Fidelity MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and Fidelity MSCI.
Diversification Opportunities for Northern Lights and Fidelity MSCI
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Northern and Fidelity is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights 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 Northern Lights 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 Northern Lights 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 Northern Lights i.e., Northern Lights and Fidelity MSCI go up and down completely randomly.
Pair Corralation between Northern Lights and Fidelity MSCI
Given the investment horizon of 90 days Northern Lights is expected to generate 1.63 times less return on investment than Fidelity MSCI. But when comparing it to its historical volatility, Northern Lights is 1.23 times less risky than Fidelity MSCI. It trades about 0.08 of its potential returns per unit of risk. Fidelity MSCI Industrials is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 6,431 in Fidelity MSCI Industrials on August 27, 2024 and sell it today you would earn a total of 1,224 from holding Fidelity MSCI Industrials or generate 19.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Lights vs. Fidelity MSCI Industrials
Performance |
| Timeline |
| Northern Lights |
| Fidelity MSCI Industrials |
Northern Lights and Fidelity MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Lights and Fidelity MSCI
The main advantage of trading using opposite Northern Lights and Fidelity MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights 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.| Northern Lights vs. Invesco Dynamic Large | Northern Lights vs. Perella Weinberg Partners | Northern Lights vs. HUMANA INC | Northern Lights 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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