Correlation Between IShares Trust and Fidelity Covington
Can any of the company-specific risk be diversified away by investing in both IShares Trust 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 IShares Trust and Fidelity Covington into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and Fidelity Covington Trust, you can compare the effects of market volatilities on IShares Trust 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 IShares Trust with a short position of Fidelity Covington. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and Fidelity Covington.
Diversification Opportunities for IShares Trust and Fidelity Covington
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Fidelity is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust 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 IShares Trust 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 iShares Trust 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 IShares Trust i.e., IShares Trust and Fidelity Covington go up and down completely randomly.
Pair Corralation between IShares Trust and Fidelity Covington
Given the investment horizon of 90 days IShares Trust is expected to generate 1.27 times less return on investment than Fidelity Covington. In addition to that, IShares Trust is 1.24 times more volatile than Fidelity Covington Trust. It trades about 0.08 of its total potential returns per unit of risk. Fidelity Covington Trust is currently generating about 0.12 per unit of volatility. If you would invest 2,893 in Fidelity Covington Trust on August 27, 2024 and sell it today you would earn a total of 604.00 from holding Fidelity Covington Trust or generate 20.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Trust vs. Fidelity Covington Trust
Performance |
| Timeline |
| iShares Trust |
| Fidelity Covington Trust |
IShares Trust and Fidelity Covington Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and Fidelity Covington
The main advantage of trading using opposite IShares Trust and Fidelity Covington positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust 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.| IShares Trust vs. First Trust Exchange Traded | IShares Trust vs. Ultimus Managers Trust | IShares Trust vs. Horizon Kinetics Medical | IShares Trust vs. Harbor Health Care |
| 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 |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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