Correlation Between Fidelity Covington and PFIZER

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

By analyzing existing cross correlation between Fidelity Covington Trust and PFIZER INC 43, you can compare the effects of market volatilities on Fidelity Covington and PFIZER 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 Covington with a short position of PFIZER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Covington and PFIZER.

Diversification Opportunities for Fidelity Covington and PFIZER

-0.56

Correlation Coefficient

Fidelity Covington  PFIZER

Excellent diversification

The 3 months correlation between Fidelity and PFIZER is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Covington Trust and PFIZER INC 43 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PFIZER INC 43 and Fidelity Covington 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 Covington Trust are associated (or correlated) with PFIZER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PFIZER INC 43 has no effect on the direction of Fidelity Covington i.e., Fidelity Covington and PFIZER go up and down completely randomly.

Pair Corralation between Fidelity Covington and PFIZER

Given the investment horizon of 90 days Fidelity Covington is expected to generate 32.11 times less return on investment than PFIZER. But when comparing it to its historical volatility, Fidelity Covington Trust is 65.87 times less risky than PFIZER. It trades about 0.13 of its potential returns per unit of risk. PFIZER INC 43 is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  9,395  in PFIZER INC 43 on September 24, 2024 and sell it today you would lose (762.00) from holding PFIZER INC 43 or give up 8.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	66.83%
Values	Daily Returns

Fidelity Covington Trust  vs.  PFIZER INC 43

Fidelity Covington Trust

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Covington Trust are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Fidelity Covington may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PFIZER INC 43

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PFIZER INC 43 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, PFIZER is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fidelity Covington and PFIZER

The main advantage of trading using opposite Fidelity Covington and PFIZER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Covington position performs unexpectedly, PFIZER 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 PFIZER will offset losses from the drop in PFIZER's long position.

The idea behind Fidelity Covington Trust and PFIZER INC 43 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.