Correlation Between Fidelity MSCI and Uber Technologies

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Can any of the company-specific risk be diversified away by investing in both Fidelity MSCI and Uber Technologies 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 Uber Technologies 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 Uber Technologies, you can compare the effects of market volatilities on Fidelity MSCI and Uber Technologies 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 Uber Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity MSCI and Uber Technologies.

Diversification Opportunities for Fidelity MSCI and Uber Technologies

0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between Fidelity and Uber is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity MSCI Energy and Uber Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uber Technologies 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 Uber Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uber Technologies has no effect on the direction of Fidelity MSCI i.e., Fidelity MSCI and Uber Technologies go up and down completely randomly.

Pair Corralation between Fidelity MSCI and Uber Technologies

Given the investment horizon of 90 days Fidelity MSCI Energy is expected to generate 0.45 times more return on investment than Uber Technologies. However, Fidelity MSCI Energy is 2.22 times less risky than Uber Technologies. It trades about 0.72 of its potential returns per unit of risk. Uber Technologies is currently generating about -0.02 per unit of risk. If you would invest  2,332  in Fidelity MSCI Energy on December 30, 2023 and sell it today you would earn a total of  255.00  from holding Fidelity MSCI Energy or generate 10.93% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Fidelity MSCI Energy  vs.  Uber Technologies

 Performance 
       Timeline  
Fidelity MSCI Energy 

Risk-Adjusted Performance

14 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity MSCI Energy are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Fidelity MSCI may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Uber Technologies 

Risk-Adjusted Performance

15 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Uber Technologies are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain technical and fundamental indicators, Uber Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Fidelity MSCI and Uber Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fidelity MSCI and Uber Technologies

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

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