Correlation Between Communication Services and Fidelity MSCI

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

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

Diversification Opportunities for Communication Services and Fidelity MSCI

0.99

Correlation Coefficient

Communication Services  Fidelity MSCI

No risk reduction

The 3 months correlation between Communication and Fidelity is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Communication Services Select and Fidelity MSCI Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity MSCI Commun and Communication Services 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 Communication Services 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 Commun has no effect on the direction of Communication Services i.e., Communication Services and Fidelity MSCI go up and down completely randomly.

Pair Corralation between Communication Services and Fidelity MSCI

Considering the 90-day investment horizon Communication Services is expected to generate 1.49 times less return on investment than Fidelity MSCI. But when comparing it to its historical volatility, Communication Services Select is 1.17 times less risky than Fidelity MSCI. It trades about 0.18 of its potential returns per unit of risk. Fidelity MSCI Communication is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  5,722  in Fidelity MSCI Communication on May 4, 2025 and sell it today you would earn a total of  777.00  from holding Fidelity MSCI Communication or generate 13.58% return on investment over 90 days.

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

Communication Services Select  vs.  Fidelity MSCI Communication

Communication Services

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Communication Services Select are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, Communication Services may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Fidelity MSCI Commun

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity MSCI Communication are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Fidelity MSCI displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Communication Services and Fidelity MSCI

The main advantage of trading using opposite Communication Services and Fidelity MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Communication Services 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 Communication Services Select and Fidelity MSCI Communication 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.