Correlation Between Fidelity and First Ottawa
Can any of the company-specific risk be diversified away by investing in both Fidelity and First Ottawa 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 and First Ottawa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity DD Bancorp and First Ottawa Bancshares, you can compare the effects of market volatilities on Fidelity and First Ottawa 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 with a short position of First Ottawa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity and First Ottawa.
Diversification Opportunities for Fidelity and First Ottawa
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and First is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity DD Bancorp and First Ottawa Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Ottawa Bancshares and Fidelity 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 DD Bancorp are associated (or correlated) with First Ottawa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Ottawa Bancshares has no effect on the direction of Fidelity i.e., Fidelity and First Ottawa go up and down completely randomly.
Pair Corralation between Fidelity and First Ottawa
Given the investment horizon of 90 days Fidelity is expected to generate 1.03 times less return on investment than First Ottawa. In addition to that, Fidelity is 3.76 times more volatile than First Ottawa Bancshares. It trades about 0.08 of its total potential returns per unit of risk. First Ottawa Bancshares is currently generating about 0.29 per unit of volatility. If you would invest 11,585 in First Ottawa Bancshares on September 1, 2024 and sell it today you would earn a total of 416.00 from holding First Ottawa Bancshares or generate 3.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity DD Bancorp vs. First Ottawa Bancshares
Performance |
| Timeline |
| Fidelity DD Bancorp |
| First Ottawa Bancshares |
Fidelity and First Ottawa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity and First Ottawa
The main advantage of trading using opposite Fidelity and First Ottawa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity position performs unexpectedly, First Ottawa 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 First Ottawa will offset losses from the drop in First Ottawa's long position.| Fidelity vs. Chemung Financial Corp | Fidelity vs. Oak Valley Bancorp | Fidelity vs. First Community | Fidelity vs. National Bankshares |
| First Ottawa vs. Century Next Financial | First Ottawa vs. Citizens Financial Corp | First Ottawa vs. Triad Business Bank | First Ottawa vs. First Bankers Trustshares |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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