Correlation Between Travelers Companies and Fidelity Covington
Can any of the company-specific risk be diversified away by investing in both Travelers Companies 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 Travelers Companies and Fidelity Covington into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Travelers Companies and Fidelity Covington Trust, you can compare the effects of market volatilities on Travelers Companies 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 Travelers Companies with a short position of Fidelity Covington. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Fidelity Covington.
Diversification Opportunities for Travelers Companies and Fidelity Covington
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Travelers and Fidelity is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies 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 Travelers Companies 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 The Travelers Companies 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 Travelers Companies i.e., Travelers Companies and Fidelity Covington go up and down completely randomly.
Pair Corralation between Travelers Companies and Fidelity Covington
Considering the 90-day investment horizon The Travelers Companies is expected to generate 1.2 times more return on investment than Fidelity Covington. However, Travelers Companies is 1.2 times more volatile than Fidelity Covington Trust. It trades about 0.32 of its potential returns per unit of risk. Fidelity Covington Trust is currently generating about 0.3 per unit of risk. If you would invest 24,594 in The Travelers Companies on September 1, 2024 and sell it today you would earn a total of 2,010 from holding The Travelers Companies or generate 8.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Travelers Companies vs. Fidelity Covington Trust
Performance |
| Timeline |
| The Travelers Companies |
| Fidelity Covington Trust |
Travelers Companies and Fidelity Covington Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and Fidelity Covington
The main advantage of trading using opposite Travelers Companies and Fidelity Covington positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies 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.| Travelers Companies vs. Selective Insurance Group | Travelers Companies vs. Aquagold International | Travelers Companies vs. Thrivent High Yield | Travelers Companies vs. Morningstar Unconstrained Allocation |
| 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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