Correlation Between VanEck Biotech and Fidelity MSCI

Can any of the company-specific risk be diversified away by investing in both VanEck Biotech 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 VanEck Biotech and Fidelity MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between VanEck Biotech ETF and Fidelity MSCI Health, you can compare the effects of market volatilities on VanEck Biotech 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 VanEck Biotech with a short position of Fidelity MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Biotech and Fidelity MSCI.

Diversification Opportunities for VanEck Biotech and Fidelity MSCI

0.55

Correlation Coefficient

VanEck Biotech  Fidelity MSCI

Very weak diversification

The 3 months correlation between VanEck and Fidelity is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Biotech ETF and Fidelity MSCI Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity MSCI Health and VanEck Biotech 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 VanEck Biotech ETF 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 Health has no effect on the direction of VanEck Biotech i.e., VanEck Biotech and Fidelity MSCI go up and down completely randomly.

Pair Corralation between VanEck Biotech and Fidelity MSCI

Considering the 90-day investment horizon VanEck Biotech ETF is expected to generate 1.24 times more return on investment than Fidelity MSCI. However, VanEck Biotech is 1.24 times more volatile than Fidelity MSCI Health. It trades about 0.16 of its potential returns per unit of risk. Fidelity MSCI Health is currently generating about 0.0 per unit of risk. If you would invest  14,468  in VanEck Biotech ETF on May 7, 2025 and sell it today you would earn a total of  2,050  from holding VanEck Biotech ETF or generate 14.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

VanEck Biotech ETF  vs.  Fidelity MSCI Health

VanEck Biotech ETF

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Biotech ETF are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent fundamental drivers, VanEck Biotech demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Fidelity MSCI Health

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity MSCI Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Fidelity MSCI is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with VanEck Biotech and Fidelity MSCI

The main advantage of trading using opposite VanEck Biotech and Fidelity MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Biotech 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.

The idea behind VanEck Biotech ETF and Fidelity MSCI Health pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.