Correlation Between Invesco NASDAQ and Fidelity Covington
Can any of the company-specific risk be diversified away by investing in both Invesco NASDAQ 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 Invesco NASDAQ and Fidelity Covington into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco NASDAQ 100 and Fidelity Covington Trust, you can compare the effects of market volatilities on Invesco NASDAQ 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 Invesco NASDAQ with a short position of Fidelity Covington. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco NASDAQ and Fidelity Covington.
Diversification Opportunities for Invesco NASDAQ and Fidelity Covington
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Invesco and Fidelity is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Invesco NASDAQ 100 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 Invesco NASDAQ 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 Invesco NASDAQ 100 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 Invesco NASDAQ i.e., Invesco NASDAQ and Fidelity Covington go up and down completely randomly.
Pair Corralation between Invesco NASDAQ and Fidelity Covington
Given the investment horizon of 90 days Invesco NASDAQ is expected to generate 1.16 times less return on investment than Fidelity Covington. In addition to that, Invesco NASDAQ is 1.02 times more volatile than Fidelity Covington Trust. It trades about 0.25 of its total potential returns per unit of risk. Fidelity Covington Trust is currently generating about 0.3 per unit of volatility. If you would invest 2,389 in Fidelity Covington Trust on September 1, 2024 and sell it today you would earn a total of 150.00 from holding Fidelity Covington Trust or generate 6.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco NASDAQ 100 vs. Fidelity Covington Trust
Performance |
| Timeline |
| Invesco NASDAQ 100 |
| Fidelity Covington Trust |
Invesco NASDAQ and Fidelity Covington Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco NASDAQ and Fidelity Covington
The main advantage of trading using opposite Invesco NASDAQ and Fidelity Covington positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco NASDAQ 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.| Invesco NASDAQ vs. Vanguard Growth Index | Invesco NASDAQ vs. iShares Russell 1000 | Invesco NASDAQ vs. iShares SP 500 | Invesco NASDAQ vs. iShares Core SP |
| Fidelity Covington vs. Vanguard Growth Index | Fidelity Covington vs. iShares Russell 1000 | Fidelity Covington vs. iShares SP 500 | Fidelity Covington vs. iShares Core SP |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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