Correlation Between Exxon and Fidelity Covington
Can any of the company-specific risk be diversified away by investing in both Exxon 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 Exxon and Fidelity Covington into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exxon Mobil Corp and Fidelity Covington Trust, you can compare the effects of market volatilities on Exxon 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 Exxon with a short position of Fidelity Covington. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and Fidelity Covington.
Diversification Opportunities for Exxon and Fidelity Covington
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Exxon and Fidelity is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp 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 Exxon 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 Exxon Mobil Corp 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 Exxon i.e., Exxon and Fidelity Covington go up and down completely randomly.
Pair Corralation between Exxon and Fidelity Covington
Considering the 90-day investment horizon Exxon is expected to generate 6.14 times less return on investment than Fidelity Covington. In addition to that, Exxon is 1.3 times more volatile than Fidelity Covington Trust. It trades about 0.05 of its total potential returns per unit of risk. Fidelity Covington Trust is currently generating about 0.39 per unit of volatility. If you would invest 3,253 in Fidelity Covington Trust on August 30, 2024 and sell it today you would earn a total of 265.00 from holding Fidelity Covington Trust or generate 8.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exxon Mobil Corp vs. Fidelity Covington Trust
Performance |
| Timeline |
| Exxon Mobil Corp |
| Fidelity Covington Trust |
Exxon and Fidelity Covington Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and Fidelity Covington
The main advantage of trading using opposite Exxon and Fidelity Covington positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon 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.| Exxon vs. BP PLC ADR | Exxon vs. Shell PLC ADR | Exxon vs. Petroleo Brasileiro Petrobras | Exxon vs. Suncor Energy |
| Fidelity Covington vs. Vanguard Mid Cap Index | Fidelity Covington vs. Vanguard Extended Market | Fidelity Covington vs. iShares Core SP | Fidelity Covington vs. iShares Russell Mid Cap |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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