Correlation Between Innovator ETFs and Fidelity Covington
Can any of the company-specific risk be diversified away by investing in both Innovator ETFs 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 Innovator ETFs and Fidelity Covington into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innovator ETFs Trust and Fidelity Covington Trust, you can compare the effects of market volatilities on Innovator ETFs 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 Innovator ETFs with a short position of Fidelity Covington. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator ETFs and Fidelity Covington.
Diversification Opportunities for Innovator ETFs and Fidelity Covington
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Innovator and Fidelity is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Innovator ETFs 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 Innovator ETFs 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 Innovator ETFs 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 Innovator ETFs i.e., Innovator ETFs and Fidelity Covington go up and down completely randomly.
Pair Corralation between Innovator ETFs and Fidelity Covington
Given the investment horizon of 90 days Innovator ETFs is expected to generate 1.19 times less return on investment than Fidelity Covington. But when comparing it to its historical volatility, Innovator ETFs Trust is 1.27 times less risky than Fidelity Covington. It trades about 0.3 of its potential returns per unit of risk. Fidelity Covington Trust is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 3,300 in Fidelity Covington Trust on September 1, 2024 and sell it today you would earn a total of 192.00 from holding Fidelity Covington Trust or generate 5.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Innovator ETFs Trust vs. Fidelity Covington Trust
Performance |
| Timeline |
| Innovator ETFs Trust |
| Fidelity Covington Trust |
Innovator ETFs and Fidelity Covington Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovator ETFs and Fidelity Covington
The main advantage of trading using opposite Innovator ETFs and Fidelity Covington positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator ETFs 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.| Innovator ETFs vs. Innovator ETFs Trust | Innovator ETFs vs. First Trust Cboe | Innovator ETFs vs. Innovator SP 500 | Innovator ETFs vs. Innovator Equity Power |
| Fidelity Covington vs. FT Vest Equity | Fidelity Covington vs. Northern Lights | Fidelity Covington vs. Dimensional International High | Fidelity Covington vs. Matthews China Discovery |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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