Correlation Between Fidelity MSCI and Goldman Sachs

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

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

Diversification Opportunities for Fidelity MSCI and Goldman Sachs

0.89

Correlation Coefficient

Fidelity MSCI  Goldman Sachs

Very poor diversification

The 3 months correlation between Fidelity and Goldman is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity MSCI Health and Goldman Sachs ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs 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 Health are associated (or correlated) with Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs ETF has no effect on the direction of Fidelity MSCI i.e., Fidelity MSCI and Goldman Sachs go up and down completely randomly.

Pair Corralation between Fidelity MSCI and Goldman Sachs

Given the investment horizon of 90 days Fidelity MSCI Health is expected to generate 0.9 times more return on investment than Goldman Sachs. However, Fidelity MSCI Health is 1.11 times less risky than Goldman Sachs. It trades about -0.1 of its potential returns per unit of risk. Goldman Sachs ETF is currently generating about -0.15 per unit of risk. If you would invest  7,370  in Fidelity MSCI Health on September 2, 2024 and sell it today you would lose (350.00) from holding Fidelity MSCI Health or give up 4.75% of portfolio value over 90 days.

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

Fidelity MSCI Health  vs.  Goldman Sachs ETF

Fidelity MSCI Health

Risk-Adjusted Performance

0 of 100

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.

Goldman Sachs ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with Fidelity MSCI and Goldman Sachs

The main advantage of trading using opposite Fidelity MSCI and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity MSCI position performs unexpectedly, Goldman Sachs 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 Goldman Sachs will offset losses from the drop in Goldman Sachs' long position.

The idea behind Fidelity MSCI Health and Goldman Sachs ETF 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.