Correlation Between Fidelity Covington and Capital Group
Can any of the company-specific risk be diversified away by investing in both Fidelity Covington and Capital Group 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 Covington and Capital Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Covington Trust and Capital Group Global, you can compare the effects of market volatilities on Fidelity Covington and Capital Group 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 Covington with a short position of Capital Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Covington and Capital Group.
Diversification Opportunities for Fidelity Covington and Capital Group
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fidelity and Capital is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Covington Trust and Capital Group Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Global and Fidelity Covington 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 Covington Trust are associated (or correlated) with Capital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Group Global has no effect on the direction of Fidelity Covington i.e., Fidelity Covington and Capital Group go up and down completely randomly.
Pair Corralation between Fidelity Covington and Capital Group
Given the investment horizon of 90 days Fidelity Covington Trust is expected to under-perform the Capital Group. In addition to that, Fidelity Covington is 2.15 times more volatile than Capital Group Global. It trades about -0.05 of its total potential returns per unit of risk. Capital Group Global is currently generating about -0.06 per unit of volatility. If you would invest 3,011 in Capital Group Global on August 30, 2024 and sell it today you would lose (33.00) from holding Capital Group Global or give up 1.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Covington Trust vs. Capital Group Global
Performance |
| Timeline |
| Fidelity Covington Trust |
| Capital Group Global |
Fidelity Covington and Capital Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Covington and Capital Group
The main advantage of trading using opposite Fidelity Covington and Capital Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Covington position performs unexpectedly, Capital Group 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 Capital Group will offset losses from the drop in Capital Group's long position.| Fidelity Covington vs. Fidelity Covington Trust | Fidelity Covington vs. Fidelity Covington Trust | Fidelity Covington vs. Fidelity Covington Trust | Fidelity Covington vs. Fidelity Crypto Industry |
| Capital Group vs. Franklin Templeton ETF | Capital Group vs. TrueShares Technology AI | Capital Group vs. Franklin Exponential Data | Capital Group vs. Franklin Genomic Advancements |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |