Correlation Between BMO MSCI and Fidelity International
Can any of the company-specific risk be diversified away by investing in both BMO 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 BMO 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 BMO MSCI EAFE and Fidelity International Value, you can compare the effects of market volatilities on BMO 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 BMO MSCI with a short position of Fidelity International. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO MSCI and Fidelity International.
Diversification Opportunities for BMO MSCI and Fidelity International
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BMO and Fidelity is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding BMO MSCI EAFE and Fidelity International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity International and BMO 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 BMO 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 BMO MSCI i.e., BMO MSCI and Fidelity International go up and down completely randomly.
Pair Corralation between BMO MSCI and Fidelity International
Assuming the 90 days trading horizon BMO MSCI EAFE is expected to generate 0.82 times more return on investment than Fidelity International. However, BMO MSCI EAFE is 1.22 times less risky than Fidelity International. It trades about -0.01 of its potential returns per unit of risk. Fidelity International Value is currently generating about -0.15 per unit of risk. If you would invest 2,971 in BMO MSCI EAFE on August 25, 2024 and sell it today you would lose (4.00) from holding BMO MSCI EAFE or give up 0.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO MSCI EAFE vs. Fidelity International Value
Performance |
| Timeline |
| BMO MSCI EAFE |
| Fidelity International |
BMO MSCI and Fidelity International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO MSCI and Fidelity International
The main advantage of trading using opposite BMO MSCI and Fidelity International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO 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.| BMO MSCI vs. iShares Core MSCI | BMO MSCI vs. Vanguard FTSE Developed | BMO MSCI vs. iShares MSCI EAFE | BMO MSCI vs. BMO Low Volatility |
| Fidelity International vs. Fidelity Value ETF | Fidelity International vs. Fidelity Canadian Value | Fidelity International vs. Fidelity International High | Fidelity International vs. Fidelity High Quality |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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