Correlation Between Fidelity Crypto and Fidelity Covington

Can any of the company-specific risk be diversified away by investing in both Fidelity Crypto 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 Fidelity Crypto and Fidelity Covington into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fidelity Crypto Industry and Fidelity Covington Trust, you can compare the effects of market volatilities on Fidelity Crypto 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 Fidelity Crypto with a short position of Fidelity Covington. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Crypto and Fidelity Covington.

Diversification Opportunities for Fidelity Crypto and Fidelity Covington

-0.11

Correlation Coefficient

Fidelity Crypto  Fidelity Covington

Good diversification

The 3 months correlation between Fidelity and Fidelity is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Crypto Industry 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 Fidelity Crypto 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 Fidelity Crypto Industry 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 Fidelity Crypto i.e., Fidelity Crypto and Fidelity Covington go up and down completely randomly.

Pair Corralation between Fidelity Crypto and Fidelity Covington

Given the investment horizon of 90 days Fidelity Crypto Industry is expected to generate 3.16 times more return on investment than Fidelity Covington. However, Fidelity Crypto is 3.16 times more volatile than Fidelity Covington Trust. It trades about 0.14 of its potential returns per unit of risk. Fidelity Covington Trust is currently generating about 0.0 per unit of risk. If you would invest  2,564  in Fidelity Crypto Industry on October 9, 2024 and sell it today you would earn a total of  1,064  from holding Fidelity Crypto Industry or generate 41.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Fidelity Crypto Industry  vs.  Fidelity Covington Trust

Fidelity Crypto Industry

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Crypto Industry are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward indicators, Fidelity Crypto reported solid returns over the last few months and may actually be approaching a breakup point.

Fidelity Covington Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Covington Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Fidelity Covington is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Fidelity Crypto and Fidelity Covington

The main advantage of trading using opposite Fidelity Crypto and Fidelity Covington positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Crypto 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.

The idea behind Fidelity Crypto Industry and Fidelity Covington Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.