Correlation Between Vanguard Growth and Fidelity Covington
Can any of the company-specific risk be diversified away by investing in both Vanguard Growth 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 Growth 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 Growth Index and Fidelity Covington Trust, you can compare the effects of market volatilities on Vanguard Growth 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 Growth with a short position of Fidelity Covington. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Growth and Fidelity Covington.
Diversification Opportunities for Vanguard Growth and Fidelity Covington
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Fidelity is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Growth Index 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 Growth 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 Growth Index 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 Growth i.e., Vanguard Growth and Fidelity Covington go up and down completely randomly.
Pair Corralation between Vanguard Growth and Fidelity Covington
Considering the 90-day investment horizon Vanguard Growth Index is expected to generate 0.94 times more return on investment than Fidelity Covington. However, Vanguard Growth Index is 1.07 times less risky than Fidelity Covington. It trades about 0.12 of its potential returns per unit of risk. Fidelity Covington Trust is currently generating about 0.02 per unit of risk. If you would invest 22,105 in Vanguard Growth Index on August 30, 2024 and sell it today you would earn a total of 18,467 from holding Vanguard Growth Index or generate 83.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Growth Index vs. Fidelity Covington Trust
Performance |
| Timeline |
| Vanguard Growth Index |
| Fidelity Covington Trust |
Vanguard Growth and Fidelity Covington Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Growth and Fidelity Covington
The main advantage of trading using opposite Vanguard Growth and Fidelity Covington positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Growth 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 Growth vs. Vanguard Value Index | Vanguard Growth vs. Vanguard Information Technology | Vanguard Growth vs. Vanguard Small Cap Growth | Vanguard Growth vs. Vanguard Dividend Appreciation |
| Fidelity Covington vs. Health Care Select | Fidelity Covington vs. Vanguard Health Care | Fidelity Covington vs. iShares Biotechnology ETF | Fidelity Covington vs. SPDR SP Biotech |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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