Correlation Between Capital Group and Fidelity Covington
Can any of the company-specific risk be diversified away by investing in both Capital Group and Fidelity Covington 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 Capital Group and Fidelity Covington into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Group Global and Fidelity Covington Trust, you can compare the effects of market volatilities on Capital Group and Fidelity Covington 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 Capital Group with a short position of Fidelity Covington. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Group and Fidelity Covington.
Diversification Opportunities for Capital Group and Fidelity Covington
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Capital and Fidelity is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Capital Group Global and Fidelity Covington Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Covington Trust and Capital Group 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 Capital Group Global are associated (or correlated) with Fidelity Covington. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Covington Trust has no effect on the direction of Capital Group i.e., Capital Group and Fidelity Covington go up and down completely randomly.
Pair Corralation between Capital Group and Fidelity Covington
Given the investment horizon of 90 days Capital Group Global is expected to generate 0.57 times more return on investment than Fidelity Covington. However, Capital Group Global is 1.77 times less risky than Fidelity Covington. It trades about 0.03 of its potential returns per unit of risk. Fidelity Covington Trust is currently generating about 0.0 per unit of risk. If you would invest 2,905 in Capital Group Global on September 1, 2024 and sell it today you would earn a total of 99.00 from holding Capital Group Global or generate 3.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Group Global vs. Fidelity Covington Trust
Performance |
| Timeline |
| Capital Group Global |
| Fidelity Covington Trust |
Capital Group and Fidelity Covington Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Group and Fidelity Covington
The main advantage of trading using opposite Capital Group and Fidelity Covington positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Group position performs unexpectedly, Fidelity Covington 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 Fidelity Covington will offset losses from the drop in Fidelity Covington's long position.| Capital Group vs. Capital Group Growth | Capital Group vs. Capital Group Dividend | Capital Group vs. Capital Group International | Capital Group vs. Capital Group Core |
| Fidelity Covington vs. The RBB Fund | Fidelity Covington vs. The RBB Fund | Fidelity Covington vs. Motley Fool Next | Fidelity Covington vs. Motley Fool Capital |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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