Correlation Between Fidelity Covington and Franklin LibertyQ
Can any of the company-specific risk be diversified away by investing in both Fidelity Covington and Franklin LibertyQ 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 Franklin LibertyQ 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 Franklin LibertyQ Mid, you can compare the effects of market volatilities on Fidelity Covington and Franklin LibertyQ 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 Franklin LibertyQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Covington and Franklin LibertyQ.
Diversification Opportunities for Fidelity Covington and Franklin LibertyQ
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Franklin is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Covington Trust and Franklin LibertyQ Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin LibertyQ Mid 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 Franklin LibertyQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin LibertyQ Mid has no effect on the direction of Fidelity Covington i.e., Fidelity Covington and Franklin LibertyQ go up and down completely randomly.
Pair Corralation between Fidelity Covington and Franklin LibertyQ
Given the investment horizon of 90 days Fidelity Covington Trust is expected to generate 1.06 times more return on investment than Franklin LibertyQ. However, Fidelity Covington is 1.06 times more volatile than Franklin LibertyQ Mid. It trades about 0.4 of its potential returns per unit of risk. Franklin LibertyQ Mid is currently generating about 0.31 per unit of risk. If you would invest 3,233 in Fidelity Covington Trust on August 26, 2024 and sell it today you would earn a total of 264.00 from holding Fidelity Covington Trust or generate 8.17% 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. Franklin LibertyQ Mid
Performance |
| Timeline |
| Fidelity Covington Trust |
| Franklin LibertyQ Mid |
Fidelity Covington and Franklin LibertyQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Covington and Franklin LibertyQ
The main advantage of trading using opposite Fidelity Covington and Franklin LibertyQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Covington position performs unexpectedly, Franklin LibertyQ 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 Franklin LibertyQ will offset losses from the drop in Franklin LibertyQ's long position.| Fidelity Covington vs. JPMorgan Fundamental Data | Fidelity Covington vs. Vanguard Mid Cap Index | Fidelity Covington vs. SPDR SP 400 | Fidelity Covington vs. SPDR SP 400 |
| Franklin LibertyQ vs. Vanguard Mid Cap Index | Franklin LibertyQ vs. Vanguard Extended Market | Franklin LibertyQ vs. iShares Core SP | Franklin LibertyQ vs. SPDR SP MIDCAP |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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