Correlation Between Fidelity MSCI and Real Estate

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

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

Diversification Opportunities for Fidelity MSCI and Real Estate

0.93

Correlation Coefficient

Fidelity MSCI  Real Estate

Almost no diversification

The 3 months correlation between Fidelity and Real is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity MSCI Real and The Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Estate 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 Real are associated (or correlated) with Real Estate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Estate has no effect on the direction of Fidelity MSCI i.e., Fidelity MSCI and Real Estate go up and down completely randomly.

Pair Corralation between Fidelity MSCI and Real Estate

Given the investment horizon of 90 days Fidelity MSCI Real is expected to generate 1.02 times more return on investment than Real Estate. However, Fidelity MSCI is 1.02 times more volatile than The Real Estate. It trades about 0.01 of its potential returns per unit of risk. The Real Estate is currently generating about 0.01 per unit of risk. If you would invest  2,391  in Fidelity MSCI Real on January 26, 2024 and sell it today you would earn a total of  39.00  from holding Fidelity MSCI Real or generate 1.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.2%
Values	Daily Returns

Fidelity MSCI Real  vs.  The Real Estate

Fidelity MSCI Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity MSCI Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Fidelity MSCI is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Real Estate is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Fidelity MSCI and Real Estate

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

The idea behind Fidelity MSCI Real and The Real Estate 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.