Correlation Between FSMO and Fidelity Covington

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

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

Diversification Opportunities for FSMO and Fidelity Covington

0.0

Correlation Coefficient

FSMO  Fidelity Covington

Pay attention - limited upside

The 3 months correlation between FSMO and Fidelity is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding FSMO 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 FSMO 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 FSMO 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 FSMO i.e., FSMO and Fidelity Covington go up and down completely randomly.

Pair Corralation between FSMO and Fidelity Covington

If you would invest  2,854  in Fidelity Covington Trust on October 25, 2024 and sell it today you would earn a total of  65.00  from holding Fidelity Covington Trust or generate 2.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	5.56%
Values	Daily Returns

FSMO  vs.  Fidelity Covington Trust

FSMO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FSMO has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, FSMO 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

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Covington Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal essential indicators, Fidelity Covington exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FSMO and Fidelity Covington

The main advantage of trading using opposite FSMO and Fidelity Covington positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FSMO 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 FSMO 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.