Correlation Between Consumer Staples and Fidelity MSCI
Can any of the company-specific risk be diversified away by investing in both Consumer Staples 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 Consumer Staples and Fidelity MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consumer Staples Select and Fidelity MSCI Consumer, you can compare the effects of market volatilities on Consumer Staples 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 Consumer Staples with a short position of Fidelity MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consumer Staples and Fidelity MSCI.
Diversification Opportunities for Consumer Staples and Fidelity MSCI
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Consumer and Fidelity is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Consumer Staples Select and Fidelity MSCI Consumer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity MSCI Consumer and Consumer Staples 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 Consumer Staples Select 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 Consumer has no effect on the direction of Consumer Staples i.e., Consumer Staples and Fidelity MSCI go up and down completely randomly.
Pair Corralation between Consumer Staples and Fidelity MSCI
Considering the 90-day investment horizon Consumer Staples is expected to generate 1.12 times less return on investment than Fidelity MSCI. In addition to that, Consumer Staples is 1.03 times more volatile than Fidelity MSCI Consumer. It trades about 0.09 of its total potential returns per unit of risk. Fidelity MSCI Consumer is currently generating about 0.11 per unit of volatility. If you would invest 4,703 in Fidelity MSCI Consumer on August 24, 2024 and sell it today you would earn a total of 391.00 from holding Fidelity MSCI Consumer or generate 8.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consumer Staples Select vs. Fidelity MSCI Consumer
Performance |
| Timeline |
| Consumer Staples Select |
| Fidelity MSCI Consumer |
Consumer Staples and Fidelity MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consumer Staples and Fidelity MSCI
The main advantage of trading using opposite Consumer Staples and Fidelity MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consumer Staples 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.| Consumer Staples vs. Consumer Discretionary Select | Consumer Staples vs. Industrial Select Sector | Consumer Staples vs. Utilities Select Sector | Consumer Staples vs. Materials Select Sector |
| Fidelity MSCI vs. iShares Consumer Discretionary | Fidelity MSCI vs. iShares Industrials ETF | Fidelity MSCI vs. iShares Utilities ETF | Fidelity MSCI vs. iShares Basic Materials |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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