Correlation Between Fidelity Real and Fidelity Covington

Can any of the company-specific risk be diversified away by investing in both Fidelity Real 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 Real 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 Real Estate and Fidelity Covington Trust, you can compare the effects of market volatilities on Fidelity Real 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 Real with a short position of Fidelity Covington. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Real and Fidelity Covington.

Diversification Opportunities for Fidelity Real and Fidelity Covington

-0.41

Correlation Coefficient

Fidelity Real  Fidelity Covington

Very good diversification

The 3 months correlation between Fidelity and Fidelity is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Real Estate 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 Real 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 Real Estate 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 Real i.e., Fidelity Real and Fidelity Covington go up and down completely randomly.

Pair Corralation between Fidelity Real and Fidelity Covington

Given the investment horizon of 90 days Fidelity Real Estate is expected to generate 0.81 times more return on investment than Fidelity Covington. However, Fidelity Real Estate is 1.23 times less risky than Fidelity Covington. It trades about 0.13 of its potential returns per unit of risk. Fidelity Covington Trust is currently generating about 0.06 per unit of risk. If you would invest  2,037  in Fidelity Real Estate on September 15, 2024 and sell it today you would earn a total of  302.00  from holding Fidelity Real Estate or generate 14.83% return on investment over 90 days.

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

Fidelity Real Estate  vs.  Fidelity Covington Trust

Fidelity Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Fidelity Real is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Fidelity Covington Trust

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Covington Trust are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Fidelity Covington may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Fidelity Real and Fidelity Covington

The main advantage of trading using opposite Fidelity Real and Fidelity Covington positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Real 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 Real Estate 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.