Correlation Between NYSE Composite and Fidelity MSCI
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Fidelity MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Fidelity MSCI Utilities, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Fidelity MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Fidelity MSCI.
Diversification Opportunities for NYSE Composite and Fidelity MSCI
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Fidelity is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Fidelity MSCI Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity MSCI Utilities and NYSE Composite 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 NYSE Composite 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 Utilities has no effect on the direction of NYSE Composite i.e., NYSE Composite and Fidelity MSCI go up and down completely randomly.
Pair Corralation between NYSE Composite and Fidelity MSCI
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.17 times less return on investment than Fidelity MSCI. But when comparing it to its historical volatility, NYSE Composite is 1.54 times less risky than Fidelity MSCI. It trades about 0.29 of its potential returns per unit of risk. Fidelity MSCI Utilities is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 5,079 in Fidelity MSCI Utilities on August 31, 2024 and sell it today you would earn a total of 251.00 from holding Fidelity MSCI Utilities or generate 4.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
NYSE Composite vs. Fidelity MSCI Utilities
Performance |
| Timeline |
NYSE Composite and Fidelity MSCI Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Fidelity MSCI Utilities
Pair trading matchups for Fidelity MSCI
Pair Trading with NYSE Composite and Fidelity MSCI
The main advantage of trading using opposite NYSE Composite and Fidelity MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Nextplat Corp | NYSE Composite vs. Qualys Inc | NYSE Composite vs. Cadence Design Systems | NYSE Composite vs. Asure Software |
| Fidelity MSCI vs. Fidelity MSCI Consumer | Fidelity MSCI vs. Fidelity MSCI Materials | Fidelity MSCI vs. Fidelity MSCI Industrials | Fidelity MSCI vs. Fidelity MSCI Financials |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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