Correlation Between Fidelity MSCI and IShares Utilities
Can any of the company-specific risk be diversified away by investing in both Fidelity MSCI and IShares Utilities 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 Fidelity MSCI and IShares Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity MSCI Utilities and iShares Utilities ETF, you can compare the effects of market volatilities on Fidelity MSCI and IShares Utilities 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 Fidelity MSCI with a short position of IShares Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity MSCI and IShares Utilities.
Diversification Opportunities for Fidelity MSCI and IShares Utilities
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Fidelity and IShares is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity MSCI Utilities and iShares Utilities ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Utilities ETF and Fidelity 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 Fidelity MSCI Utilities are associated (or correlated) with IShares Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Utilities ETF has no effect on the direction of Fidelity MSCI i.e., Fidelity MSCI and IShares Utilities go up and down completely randomly.
Pair Corralation between Fidelity MSCI and IShares Utilities
Given the investment horizon of 90 days Fidelity MSCI Utilities is expected to generate 1.13 times more return on investment than IShares Utilities. However, Fidelity MSCI is 1.13 times more volatile than iShares Utilities ETF. It trades about 0.07 of its potential returns per unit of risk. iShares Utilities ETF is currently generating about 0.06 per unit of risk. If you would invest 4,217 in Fidelity MSCI Utilities on January 29, 2024 and sell it today you would earn a total of 52.00 from holding Fidelity MSCI Utilities or generate 1.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity MSCI Utilities vs. iShares Utilities ETF
Performance |
| Timeline |
| Fidelity MSCI Utilities |
| iShares Utilities ETF |
Fidelity MSCI and IShares Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity MSCI and IShares Utilities
The main advantage of trading using opposite Fidelity MSCI and IShares Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity MSCI position performs unexpectedly, IShares Utilities 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 IShares Utilities will offset losses from the drop in IShares Utilities' long position.| Fidelity MSCI vs. First Trust Consumer | Fidelity MSCI vs. First Trust IndustrialsProducer | Fidelity MSCI vs. First Trust Consumer | Fidelity MSCI vs. First Trust Energy |
| IShares Utilities vs. First Trust Consumer | IShares Utilities vs. First Trust IndustrialsProducer | IShares Utilities vs. First Trust Consumer | IShares Utilities vs. First Trust Energy |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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