Correlation Between Fidelity and FS Bancorp

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

Diversification Opportunities for Fidelity and FS Bancorp

0.81

Correlation Coefficient

Fidelity  FS Bancorp

Very poor diversification

The 3 months correlation between Fidelity and FSBW is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity DD Bancorp and FS Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FS Bancorp 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 FS Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FS Bancorp has no effect on the direction of Fidelity i.e., Fidelity and FS Bancorp go up and down completely randomly.

Pair Corralation between Fidelity and FS Bancorp

Given the investment horizon of 90 days Fidelity DD Bancorp is expected to generate 1.07 times more return on investment than FS Bancorp. However, Fidelity is 1.07 times more volatile than FS Bancorp. It trades about 0.05 of its potential returns per unit of risk. FS Bancorp is currently generating about 0.05 per unit of risk. If you would invest  5,159  in Fidelity DD Bancorp on September 12, 2024 and sell it today you would earn a total of  326.00  from holding Fidelity DD Bancorp or generate 6.32% return on investment over 90 days.

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

Fidelity DD Bancorp  vs.  FS Bancorp

Fidelity DD Bancorp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity DD Bancorp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental drivers, Fidelity may actually be approaching a critical reversion point that can send shares even higher in January 2025.

FS Bancorp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FS Bancorp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental drivers, FS Bancorp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Fidelity and FS Bancorp

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

The idea behind Fidelity DD Bancorp and FS Bancorp 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.