Correlation Between Main Street and Fidelity
Can any of the company-specific risk be diversified away by investing in both Main Street and Fidelity 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 Main Street and Fidelity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Main Street Financial and Fidelity DD Bancorp, you can compare the effects of market volatilities on Main Street and Fidelity 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 Main Street with a short position of Fidelity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Main Street and Fidelity.
Diversification Opportunities for Main Street and Fidelity
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Main and Fidelity is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Main Street Financial and Fidelity DD Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity DD Bancorp and Main Street 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 Main Street Financial are associated (or correlated) with Fidelity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity DD Bancorp has no effect on the direction of Main Street i.e., Main Street and Fidelity go up and down completely randomly.
Pair Corralation between Main Street and Fidelity
Given the investment horizon of 90 days Main Street is expected to generate 4.56 times less return on investment than Fidelity. In addition to that, Main Street is 1.06 times more volatile than Fidelity DD Bancorp. It trades about 0.01 of its total potential returns per unit of risk. Fidelity DD Bancorp is currently generating about 0.03 per unit of volatility. If you would invest 4,422 in Fidelity DD Bancorp on August 26, 2024 and sell it today you would earn a total of 949.00 from holding Fidelity DD Bancorp or generate 21.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Main Street Financial vs. Fidelity DD Bancorp
Performance |
| Timeline |
| Main Street Financial |
| Fidelity DD Bancorp |
Main Street and Fidelity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Main Street and Fidelity
The main advantage of trading using opposite Main Street and Fidelity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Main Street position performs unexpectedly, Fidelity 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 will offset losses from the drop in Fidelity's long position.| Main Street vs. CCFNB Bancorp | Main Street vs. Burke Herbert Financial | Main Street vs. First IC | Main Street vs. Enterprise Financial Services |
| Fidelity vs. Chemung Financial Corp | Fidelity vs. Oak Valley Bancorp | Fidelity vs. First Community | Fidelity vs. National Bankshares |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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