Correlation Between SPDR Portfolio and Fidelity Covington
Can any of the company-specific risk be diversified away by investing in both SPDR Portfolio 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 SPDR Portfolio and Fidelity Covington into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Portfolio SP and Fidelity Covington Trust, you can compare the effects of market volatilities on SPDR Portfolio 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 SPDR Portfolio with a short position of Fidelity Covington. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Portfolio and Fidelity Covington.
Diversification Opportunities for SPDR Portfolio and Fidelity Covington
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SPDR and Fidelity is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Portfolio SP 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 SPDR Portfolio 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 SPDR Portfolio SP 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 SPDR Portfolio i.e., SPDR Portfolio and Fidelity Covington go up and down completely randomly.
Pair Corralation between SPDR Portfolio and Fidelity Covington
Given the investment horizon of 90 days SPDR Portfolio SP is expected to generate 1.09 times more return on investment than Fidelity Covington. However, SPDR Portfolio is 1.09 times more volatile than Fidelity Covington Trust. It trades about 0.12 of its potential returns per unit of risk. Fidelity Covington Trust is currently generating about 0.11 per unit of risk. If you would invest 8,294 in SPDR Portfolio SP on August 29, 2024 and sell it today you would earn a total of 421.00 from holding SPDR Portfolio SP or generate 5.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Portfolio SP vs. Fidelity Covington Trust
Performance |
| Timeline |
| SPDR Portfolio SP |
| Fidelity Covington Trust |
SPDR Portfolio and Fidelity Covington Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Portfolio and Fidelity Covington
The main advantage of trading using opposite SPDR Portfolio and Fidelity Covington positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Portfolio 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.| SPDR Portfolio vs. iShares Russell 1000 | SPDR Portfolio vs. iShares Russell Top | SPDR Portfolio vs. Vanguard Mega Cap | SPDR Portfolio vs. Invesco QQQ Trust |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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