Correlation Between IShares MSCI and Fidelity International
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and Fidelity International 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 MSCI and Fidelity International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI EAFE and Fidelity International High, you can compare the effects of market volatilities on IShares MSCI and Fidelity International 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 MSCI with a short position of Fidelity International. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Fidelity International.
Diversification Opportunities for IShares MSCI and Fidelity International
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and Fidelity is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI EAFE and Fidelity International High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity International and IShares MSCI 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 MSCI EAFE are associated (or correlated) with Fidelity International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity International has no effect on the direction of IShares MSCI i.e., IShares MSCI and Fidelity International go up and down completely randomly.
Pair Corralation between IShares MSCI and Fidelity International
Assuming the 90 days trading horizon iShares MSCI EAFE is expected to under-perform the Fidelity International. But the etf apears to be less risky and, when comparing its historical volatility, iShares MSCI EAFE is 1.03 times less risky than Fidelity International. The etf trades about -0.01 of its potential returns per unit of risk. The Fidelity International High is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,724 in Fidelity International High on August 29, 2024 and sell it today you would earn a total of 161.00 from holding Fidelity International High or generate 4.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI EAFE vs. Fidelity International High
Performance |
| Timeline |
| iShares MSCI EAFE |
| Fidelity International |
IShares MSCI and Fidelity International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and Fidelity International
The main advantage of trading using opposite IShares MSCI and Fidelity International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, Fidelity International 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 International will offset losses from the drop in Fidelity International's long position.| IShares MSCI vs. iShares SPTSX Completion | IShares MSCI vs. iShares Canadian Universe | IShares MSCI vs. iShares Core SP | IShares MSCI vs. iShares SPTSX Capped |
| Fidelity International vs. BMO SP 500 | Fidelity International vs. BMO MSCI Emerging | Fidelity International vs. BMO Global Infrastructure | Fidelity International vs. BMO MSCI EAFE |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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