Correlation Between Fidelity Covington and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both Fidelity Covington and IShares MSCI 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 IShares MSCI 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 iShares MSCI USA, you can compare the effects of market volatilities on Fidelity Covington and IShares MSCI 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 IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Covington and IShares MSCI.
Diversification Opportunities for Fidelity Covington and IShares MSCI
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and IShares is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Covington Trust and iShares MSCI USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI USA 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 IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI USA has no effect on the direction of Fidelity Covington i.e., Fidelity Covington and IShares MSCI go up and down completely randomly.
Pair Corralation between Fidelity Covington and IShares MSCI
Given the investment horizon of 90 days Fidelity Covington Trust is expected to generate 1.44 times more return on investment than IShares MSCI. However, Fidelity Covington is 1.44 times more volatile than iShares MSCI USA. It trades about 0.11 of its potential returns per unit of risk. iShares MSCI USA is currently generating about 0.12 per unit of risk. If you would invest 1,296 in Fidelity Covington Trust on August 30, 2024 and sell it today you would earn a total of 1,217 from holding Fidelity Covington Trust or generate 93.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Covington Trust vs. iShares MSCI USA
Performance |
| Timeline |
| Fidelity Covington Trust |
| iShares MSCI USA |
Fidelity Covington and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Covington and IShares MSCI
The main advantage of trading using opposite Fidelity Covington and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Covington position performs unexpectedly, IShares MSCI 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 IShares MSCI will offset losses from the drop in IShares MSCI's long position.| Fidelity Covington vs. iShares MSCI USA | Fidelity Covington vs. iShares MSCI USA | Fidelity Covington vs. iShares MSCI USA | Fidelity Covington vs. iShares Expanded Tech Software |
| IShares MSCI vs. iShares MSCI USA | IShares MSCI vs. iShares MSCI USA | IShares MSCI vs. iShares MSCI USA | IShares MSCI vs. Invesco SP 500 |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |