Correlation Between IShares MSCI and Fidelity Covington
Can any of the company-specific risk be diversified away by investing in both IShares MSCI 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 IShares MSCI and Fidelity Covington into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI USA and Fidelity Covington Trust, you can compare the effects of market volatilities on IShares MSCI 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 IShares MSCI with a short position of Fidelity Covington. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Fidelity Covington.
Diversification Opportunities for IShares MSCI and Fidelity Covington
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and Fidelity is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI USA 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 IShares MSCI 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 iShares MSCI USA 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 IShares MSCI i.e., IShares MSCI and Fidelity Covington go up and down completely randomly.
Pair Corralation between IShares MSCI and Fidelity Covington
Given the investment horizon of 90 days IShares MSCI is expected to generate 1.55 times less return on investment than Fidelity Covington. But when comparing it to its historical volatility, iShares MSCI USA is 1.1 times less risky than Fidelity Covington. It trades about 0.08 of its potential returns per unit of risk. Fidelity Covington Trust is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,429 in Fidelity Covington Trust on August 14, 2025 and sell it today you would earn a total of 294.00 from holding Fidelity Covington Trust or generate 8.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI USA vs. Fidelity Covington Trust
Performance |
| Timeline |
| iShares MSCI USA |
| Fidelity Covington Trust |
IShares MSCI and Fidelity Covington Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and Fidelity Covington
The main advantage of trading using opposite IShares MSCI and Fidelity Covington positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI 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.| IShares MSCI vs. iShares Edge MSCI | IShares MSCI vs. Fidelity MSCI Financials | IShares MSCI vs. SPDR SP 400 | IShares MSCI vs. iShares Edge MSCI |
| Fidelity Covington vs. SPDR SP 400 | Fidelity Covington vs. Fidelity Covington Trust | Fidelity Covington vs. Invesco FTSE RAFI | Fidelity Covington vs. iShares MSCI USA |
Check out your portfolio center.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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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