Correlation Between Fidelity MSCI and Hyundai

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

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

Diversification Opportunities for Fidelity MSCI and Hyundai

0.41

Correlation Coefficient

Fidelity MSCI  Hyundai

Very weak diversification

The 3 months correlation between Fidelity and Hyundai is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity MSCI Information and Hyundai Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor 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 Information are associated (or correlated) with Hyundai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Motor has no effect on the direction of Fidelity MSCI i.e., Fidelity MSCI and Hyundai go up and down completely randomly.

Pair Corralation between Fidelity MSCI and Hyundai

Given the investment horizon of 90 days Fidelity MSCI Information is expected to generate 0.58 times more return on investment than Hyundai. However, Fidelity MSCI Information is 1.72 times less risky than Hyundai. It trades about 0.1 of its potential returns per unit of risk. Hyundai Motor is currently generating about 0.03 per unit of risk. If you would invest  16,919  in Fidelity MSCI Information on June 29, 2024 and sell it today you would earn a total of  524.00  from holding Fidelity MSCI Information or generate 3.1% return on investment over 90 days.

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

Fidelity MSCI Information  vs.  Hyundai Motor

Fidelity MSCI Information

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity MSCI Information are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Fidelity MSCI is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Hyundai Motor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyundai Motor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Hyundai is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Fidelity MSCI and Hyundai

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

The idea behind Fidelity MSCI Information and Hyundai Motor 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.