Correlation Between IShares ESG and Fidelity MSCI

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

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

Diversification Opportunities for IShares ESG and Fidelity MSCI

0.36

Correlation Coefficient

IShares ESG  Fidelity MSCI

Weak diversification

The 3 months correlation between IShares and Fidelity is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Aware and Fidelity MSCI Financials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity MSCI Financials and IShares ESG 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 ESG Aware 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 Financials has no effect on the direction of IShares ESG i.e., IShares ESG and Fidelity MSCI go up and down completely randomly.

Pair Corralation between IShares ESG and Fidelity MSCI

Given the investment horizon of 90 days iShares ESG Aware is expected to generate 1.23 times more return on investment than Fidelity MSCI. However, IShares ESG is 1.23 times more volatile than Fidelity MSCI Financials. It trades about 0.01 of its potential returns per unit of risk. Fidelity MSCI Financials is currently generating about -0.06 per unit of risk. If you would invest  4,401  in iShares ESG Aware on August 26, 2025 and sell it today you would earn a total of  9.00  from holding iShares ESG Aware or generate 0.2% return on investment over 90 days.

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

iShares ESG Aware  vs.  Fidelity MSCI Financials

iShares ESG Aware

Risk-Adjusted Performance

Weakest

Over the last 90 days iShares ESG Aware has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, IShares ESG is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Fidelity MSCI Financials

Risk-Adjusted Performance

Weakest

Over the last 90 days Fidelity MSCI Financials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Fidelity MSCI is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with IShares ESG and Fidelity MSCI

The main advantage of trading using opposite IShares ESG and Fidelity MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares ESG 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 iShares ESG Aware and Fidelity MSCI Financials 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.

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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.