Correlation Between Oak Valley and Fidelity
Can any of the company-specific risk be diversified away by investing in both Oak Valley 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 Oak Valley and Fidelity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oak Valley Bancorp and Fidelity DD Bancorp, you can compare the effects of market volatilities on Oak Valley 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 Oak Valley with a short position of Fidelity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oak Valley and Fidelity.
Diversification Opportunities for Oak Valley and Fidelity
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Oak and Fidelity is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Oak Valley Bancorp 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 Oak Valley 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 Oak Valley Bancorp 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 Oak Valley i.e., Oak Valley and Fidelity go up and down completely randomly.
Pair Corralation between Oak Valley and Fidelity
Given the investment horizon of 90 days Oak Valley Bancorp is expected to under-perform the Fidelity. But the stock apears to be less risky and, when comparing its historical volatility, Oak Valley Bancorp is 1.16 times less risky than Fidelity. The stock trades about -0.16 of its potential returns per unit of risk. The Fidelity DD Bancorp is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 4,695 in Fidelity DD Bancorp on November 3, 2024 and sell it today you would lose (215.00) from holding Fidelity DD Bancorp or give up 4.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Oak Valley Bancorp vs. Fidelity DD Bancorp
Performance |
| Timeline |
| Oak Valley Bancorp |
| Fidelity DD Bancorp |
Oak Valley and Fidelity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oak Valley and Fidelity
The main advantage of trading using opposite Oak Valley and Fidelity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oak Valley 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.| Oak Valley vs. Home Federal Bancorp | Oak Valley vs. Lake Shore Bancorp | Oak Valley vs. Community West Bancshares | Oak Valley vs. Magyar Bancorp |
| 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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