Correlation Between IShares Core and Fidelity Momentum
Can any of the company-specific risk be diversified away by investing in both IShares Core and Fidelity Momentum 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 Core and Fidelity Momentum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core Canadian and Fidelity Momentum ETF, you can compare the effects of market volatilities on IShares Core and Fidelity Momentum 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 Core with a short position of Fidelity Momentum. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Fidelity Momentum.
Diversification Opportunities for IShares Core and Fidelity Momentum
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and Fidelity is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Canadian and Fidelity Momentum ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Momentum ETF and IShares Core 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 Core Canadian are associated (or correlated) with Fidelity Momentum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Momentum ETF has no effect on the direction of IShares Core i.e., IShares Core and Fidelity Momentum go up and down completely randomly.
Pair Corralation between IShares Core and Fidelity Momentum
Assuming the 90 days trading horizon IShares Core is expected to generate 7.59 times less return on investment than Fidelity Momentum. But when comparing it to its historical volatility, iShares Core Canadian is 1.05 times less risky than Fidelity Momentum. It trades about 0.02 of its potential returns per unit of risk. Fidelity Momentum ETF is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 995.00 in Fidelity Momentum ETF on September 3, 2024 and sell it today you would earn a total of 773.00 from holding Fidelity Momentum ETF or generate 77.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core Canadian vs. Fidelity Momentum ETF
Performance |
| Timeline |
| iShares Core Canadian |
| Fidelity Momentum ETF |
IShares Core and Fidelity Momentum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and Fidelity Momentum
The main advantage of trading using opposite IShares Core and Fidelity Momentum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, Fidelity Momentum 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 Momentum will offset losses from the drop in Fidelity Momentum's long position.| IShares Core vs. BMO Mid Corporate | IShares Core vs. BMO Short Corporate | IShares Core vs. BMO High Yield | IShares Core vs. BMO Emerging Markets |
| Fidelity Momentum vs. Fidelity Global Value | Fidelity Momentum vs. Fidelity Canadian High | Fidelity Momentum vs. Fidelity All in One Balanced | Fidelity Momentum vs. Fidelity Advantage Bitcoin |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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