Correlation Between Vanguard Dividend and Fidelity Covington
Can any of the company-specific risk be diversified away by investing in both Vanguard Dividend 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 Vanguard Dividend and Fidelity Covington into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Dividend Appreciation and Fidelity Covington Trust, you can compare the effects of market volatilities on Vanguard Dividend 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 Vanguard Dividend with a short position of Fidelity Covington. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Dividend and Fidelity Covington.
Diversification Opportunities for Vanguard Dividend and Fidelity Covington
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Fidelity is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Dividend Appreciation 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 Vanguard Dividend 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 Vanguard Dividend Appreciation 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 Vanguard Dividend i.e., Vanguard Dividend and Fidelity Covington go up and down completely randomly.
Pair Corralation between Vanguard Dividend and Fidelity Covington
Considering the 90-day investment horizon Vanguard Dividend is expected to generate 1.59 times less return on investment than Fidelity Covington. But when comparing it to its historical volatility, Vanguard Dividend Appreciation is 1.08 times less risky than Fidelity Covington. It trades about 0.1 of its potential returns per unit of risk. Fidelity Covington Trust is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 3,209 in Fidelity Covington Trust on August 30, 2024 and sell it today you would earn a total of 149.00 from holding Fidelity Covington Trust or generate 4.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 97.73% |
| Values | Daily Returns |
Vanguard Dividend Appreciation vs. Fidelity Covington Trust
Performance |
| Timeline |
| Vanguard Dividend |
| Fidelity Covington Trust |
Vanguard Dividend and Fidelity Covington Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Dividend and Fidelity Covington
The main advantage of trading using opposite Vanguard Dividend and Fidelity Covington positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Dividend 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.| Vanguard Dividend vs. Vanguard High Dividend | Vanguard Dividend vs. Vanguard Real Estate | Vanguard Dividend vs. Schwab Dividend Equity | Vanguard Dividend vs. Vanguard Growth Index |
| Fidelity Covington vs. JPMorgan BetaBuilders International | Fidelity Covington vs. JPMorgan Core Plus | Fidelity Covington vs. JPMorgan BetaBuilders Canada | Fidelity Covington vs. JPMorgan Emerging Markets |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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