Correlation Between Technology Select and Fidelity Covington
Can any of the company-specific risk be diversified away by investing in both Technology Select 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 Technology Select and Fidelity Covington into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Technology Select Sector and Fidelity Covington Trust, you can compare the effects of market volatilities on Technology Select 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 Technology Select with a short position of Fidelity Covington. Check out your portfolio center. Please also check ongoing floating volatility patterns of Technology Select and Fidelity Covington.
Diversification Opportunities for Technology Select and Fidelity Covington
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Technology and Fidelity is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Technology Select Sector 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 Technology Select 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 Technology Select Sector 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 Technology Select i.e., Technology Select and Fidelity Covington go up and down completely randomly.
Pair Corralation between Technology Select and Fidelity Covington
Considering the 90-day investment horizon Technology Select is expected to generate 2.8 times less return on investment than Fidelity Covington. But when comparing it to its historical volatility, Technology Select Sector is 1.28 times less risky than Fidelity Covington. It trades about 0.24 of its potential returns per unit of risk. Fidelity Covington Trust is currently generating about 0.51 of returns per unit of risk over similar time horizon. If you would invest 2,525 in Fidelity Covington Trust on September 4, 2024 and sell it today you would earn a total of 408.00 from holding Fidelity Covington Trust or generate 16.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Technology Select Sector vs. Fidelity Covington Trust
Performance |
| Timeline |
| Technology Select Sector |
| Fidelity Covington Trust |
Technology Select and Fidelity Covington Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Technology Select and Fidelity Covington
The main advantage of trading using opposite Technology Select and Fidelity Covington positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Technology Select 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.| Technology Select vs. iShares Exponential Technologies | Technology Select vs. ALPS Disruptive Technologies | Technology Select vs. Fidelity MSCI Information | Technology Select vs. iShares Expanded Tech |
| Fidelity Covington vs. Vanguard Information Technology | Fidelity Covington vs. Technology Select Sector | Fidelity Covington vs. iShares Technology ETF | Fidelity Covington vs. VanEck Semiconductor ETF |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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