Correlation Between Fidelity MSCI and Global X

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

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

Diversification Opportunities for Fidelity MSCI and Global X

0.68

Correlation Coefficient

Fidelity MSCI  Global X

Poor diversification

The 3 months correlation between Fidelity and Global is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity MSCI Industrials and Global X Blockchain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Blockchain 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 Industrials are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Blockchain has no effect on the direction of Fidelity MSCI i.e., Fidelity MSCI and Global X go up and down completely randomly.

Pair Corralation between Fidelity MSCI and Global X

Given the investment horizon of 90 days Fidelity MSCI is expected to generate 5.24 times less return on investment than Global X. But when comparing it to its historical volatility, Fidelity MSCI Industrials is 5.1 times less risky than Global X. It trades about 0.08 of its potential returns per unit of risk. Global X Blockchain is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,512  in Global X Blockchain on September 29, 2024 and sell it today you would earn a total of  4,279  from holding Global X Blockchain or generate 283.0% return on investment over 90 days.

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

Fidelity MSCI Industrials  vs.  Global X Blockchain

Fidelity MSCI Industrials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity MSCI Industrials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Fidelity MSCI is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Global X Blockchain

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Blockchain are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain fundamental indicators, Global X demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fidelity MSCI and Global X

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

The idea behind Fidelity MSCI Industrials and Global X Blockchain 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.