Correlation Between Fidelity Covington and TRIMBLE

Can any of the company-specific risk be diversified away by investing in both Fidelity Covington and TRIMBLE 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 TRIMBLE 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 TRIMBLE INC 475, you can compare the effects of market volatilities on Fidelity Covington and TRIMBLE 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 TRIMBLE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Covington and TRIMBLE.

Diversification Opportunities for Fidelity Covington and TRIMBLE

-0.4

Correlation Coefficient

Fidelity Covington  TRIMBLE

Very good diversification

The 3 months correlation between Fidelity and TRIMBLE is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Covington Trust and TRIMBLE INC 475 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRIMBLE INC 475 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 TRIMBLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRIMBLE INC 475 has no effect on the direction of Fidelity Covington i.e., Fidelity Covington and TRIMBLE go up and down completely randomly.

Pair Corralation between Fidelity Covington and TRIMBLE

Given the investment horizon of 90 days Fidelity Covington Trust is expected to generate 3.13 times more return on investment than TRIMBLE. However, Fidelity Covington is 3.13 times more volatile than TRIMBLE INC 475. It trades about 0.16 of its potential returns per unit of risk. TRIMBLE INC 475 is currently generating about -0.04 per unit of risk. If you would invest  3,314  in Fidelity Covington Trust on September 28, 2024 and sell it today you would earn a total of  346.00  from holding Fidelity Covington Trust or generate 10.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	62.9%
Values	Daily Returns

Fidelity Covington Trust  vs.  TRIMBLE INC 475

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. Despite nearly fragile essential indicators, Fidelity Covington may actually be approaching a critical reversion point that can send shares even higher in January 2025.

TRIMBLE INC 475

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TRIMBLE INC 475 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, TRIMBLE 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 TRIMBLE

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

The idea behind Fidelity Covington Trust and TRIMBLE INC 475 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.