Correlation Between Fidelity MSCI and Kamada

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Can any of the company-specific risk be diversified away by investing in both Fidelity MSCI and Kamada 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 Kamada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity MSCI Energy and Kamada, you can compare the effects of market volatilities on Fidelity MSCI and Kamada 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 Kamada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity MSCI and Kamada.

Diversification Opportunities for Fidelity MSCI and Kamada

0.24
  Correlation Coefficient

Modest diversification

The 3 months correlation between Fidelity and Kamada is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity MSCI Energy and Kamada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kamada 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 Energy are associated (or correlated) with Kamada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kamada has no effect on the direction of Fidelity MSCI i.e., Fidelity MSCI and Kamada go up and down completely randomly.

Pair Corralation between Fidelity MSCI and Kamada

Given the investment horizon of 90 days Fidelity MSCI Energy is expected to generate 0.94 times more return on investment than Kamada. However, Fidelity MSCI Energy is 1.07 times less risky than Kamada. It trades about 0.09 of its potential returns per unit of risk. Kamada is currently generating about -0.04 per unit of risk. If you would invest  1,114  in Fidelity MSCI Energy on October 30, 2022 and sell it today you would earn a total of  1,372  from holding Fidelity MSCI Energy or generate 123.16% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy99.8%
ValuesDaily Returns

Fidelity MSCI Energy  vs.  Kamada

 Performance (%) 
       Timeline  
Fidelity MSCI Energy 
Fidelity Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity MSCI Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Fidelity MSCI is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Price Channel

Kamada 
Kamada Performance
0 of 100
Over the last 90 days Kamada has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Kamada is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Kamada Price Channel

Fidelity MSCI and Kamada Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fidelity MSCI and Kamada

The main advantage of trading using opposite Fidelity MSCI and Kamada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity MSCI position performs unexpectedly, Kamada 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 Kamada will offset losses from the drop in Kamada's long position.
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The idea behind Fidelity MSCI Energy and Kamada 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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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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