Correlation Between Fidelity and Dimeco

Can any of the company-specific risk be diversified away by investing in both Fidelity and Dimeco 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 Dimeco 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 Dimeco Inc, you can compare the effects of market volatilities on Fidelity and Dimeco 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 Dimeco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity and Dimeco.

Diversification Opportunities for Fidelity and Dimeco

0.4

Correlation Coefficient

Fidelity  Dimeco

Very weak diversification

The 3 months correlation between Fidelity and Dimeco is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity DD Bancorp and Dimeco Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimeco Inc 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 Dimeco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimeco Inc has no effect on the direction of Fidelity i.e., Fidelity and Dimeco go up and down completely randomly.

Pair Corralation between Fidelity and Dimeco

Given the investment horizon of 90 days Fidelity DD Bancorp is expected to under-perform the Dimeco. In addition to that, Fidelity is 1.06 times more volatile than Dimeco Inc. It trades about -0.35 of its total potential returns per unit of risk. Dimeco Inc is currently generating about 0.19 per unit of volatility. If you would invest  3,850  in Dimeco Inc on October 26, 2024 and sell it today you would earn a total of  295.00  from holding Dimeco Inc or generate 7.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Fidelity DD Bancorp  vs.  Dimeco Inc

Fidelity DD Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity DD Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Dimeco Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dimeco Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, Dimeco is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Fidelity and Dimeco

The main advantage of trading using opposite Fidelity and Dimeco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity position performs unexpectedly, Dimeco 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 Dimeco will offset losses from the drop in Dimeco's long position.

The idea behind Fidelity DD Bancorp and Dimeco Inc 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.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.