Correlation Between Schwab Strategic and Fidelity Covington
Can any of the company-specific risk be diversified away by investing in both Schwab Strategic 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 Schwab Strategic and Fidelity Covington into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schwab Strategic Trust and Fidelity Covington Trust, you can compare the effects of market volatilities on Schwab Strategic 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 Schwab Strategic with a short position of Fidelity Covington. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schwab Strategic and Fidelity Covington.
Diversification Opportunities for Schwab Strategic and Fidelity Covington
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Schwab and Fidelity is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Schwab Strategic 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 Schwab Strategic 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 Schwab Strategic 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 Schwab Strategic i.e., Schwab Strategic and Fidelity Covington go up and down completely randomly.
Pair Corralation between Schwab Strategic and Fidelity Covington
Given the investment horizon of 90 days Schwab Strategic Trust is expected to generate 2.63 times more return on investment than Fidelity Covington. However, Schwab Strategic is 2.63 times more volatile than Fidelity Covington Trust. It trades about 0.34 of its potential returns per unit of risk. Fidelity Covington Trust is currently generating about -0.05 per unit of risk. If you would invest 3,751 in Schwab Strategic Trust on September 4, 2024 and sell it today you would earn a total of 1,597 from holding Schwab Strategic Trust or generate 42.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Schwab Strategic Trust vs. Fidelity Covington Trust
Performance |
| Timeline |
| Schwab Strategic Trust |
| Fidelity Covington Trust |
Schwab Strategic and Fidelity Covington Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schwab Strategic and Fidelity Covington
The main advantage of trading using opposite Schwab Strategic and Fidelity Covington positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schwab Strategic 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.| Schwab Strategic vs. Grayscale Bitcoin Trust | Schwab Strategic vs. ProShares Bitcoin Strategy | Schwab Strategic vs. Amplify Transformational Data | Schwab Strategic vs. First Trust Indxx |
| Fidelity Covington vs. Managed Account Series | Fidelity Covington vs. Fidelity Sai International | Fidelity Covington vs. Schwab Strategic Trust | Fidelity Covington vs. Inpex Corp ADR |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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