Correlation Between Fidelity and Eagle Bancorp
Can any of the company-specific risk be diversified away by investing in both Fidelity and Eagle Bancorp 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 Eagle Bancorp 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 Eagle Bancorp Montana, you can compare the effects of market volatilities on Fidelity and Eagle Bancorp 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 Eagle Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity and Eagle Bancorp.
Diversification Opportunities for Fidelity and Eagle Bancorp
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fidelity and Eagle is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity DD Bancorp and Eagle Bancorp Montana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Bancorp Montana 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 Eagle Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Bancorp Montana has no effect on the direction of Fidelity i.e., Fidelity and Eagle Bancorp go up and down completely randomly.
Pair Corralation between Fidelity and Eagle Bancorp
Given the investment horizon of 90 days Fidelity DD Bancorp is expected to under-perform the Eagle Bancorp. In addition to that, Fidelity is 2.0 times more volatile than Eagle Bancorp Montana. It trades about -0.16 of its total potential returns per unit of risk. Eagle Bancorp Montana is currently generating about -0.21 per unit of volatility. If you would invest 1,285 in Eagle Bancorp Montana on January 20, 2024 and sell it today you would lose (46.00) from holding Eagle Bancorp Montana or give up 3.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Fidelity DD Bancorp vs. Eagle Bancorp Montana
Performance |
| Timeline |
| Fidelity DD Bancorp |
| Eagle Bancorp Montana |
Fidelity and Eagle Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity and Eagle Bancorp
The main advantage of trading using opposite Fidelity and Eagle Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity position performs unexpectedly, Eagle Bancorp 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 Eagle Bancorp will offset losses from the drop in Eagle Bancorp's long position.The idea behind Fidelity DD Bancorp and Eagle Bancorp Montana 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.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 Transaction History module to view history of all your transactions and understand their impact on performance.
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