Correlation Between Veritex Holdings and Fidelity

Can any of the company-specific risk be diversified away by investing in both Veritex Holdings 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 Veritex Holdings and Fidelity into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Veritex Holdings and Fidelity DD Bancorp, you can compare the effects of market volatilities on Veritex Holdings 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 Veritex Holdings with a short position of Fidelity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Veritex Holdings and Fidelity.

Diversification Opportunities for Veritex Holdings and Fidelity

0.66

Correlation Coefficient

Veritex Holdings  Fidelity

Poor diversification

The 3 months correlation between Veritex and Fidelity is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Veritex Holdings 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 Veritex Holdings 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 Veritex Holdings 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 Veritex Holdings i.e., Veritex Holdings and Fidelity go up and down completely randomly.

Pair Corralation between Veritex Holdings and Fidelity

Given the investment horizon of 90 days Veritex Holdings is expected to generate 0.92 times more return on investment than Fidelity. However, Veritex Holdings is 1.09 times less risky than Fidelity. It trades about 0.17 of its potential returns per unit of risk. Fidelity DD Bancorp is currently generating about 0.04 per unit of risk. If you would invest  2,409  in Veritex Holdings on September 4, 2024 and sell it today you would earn a total of  629.00  from holding Veritex Holdings or generate 26.11% return on investment over 90 days.

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

Veritex Holdings  vs.  Fidelity DD Bancorp

Veritex Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Veritex Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Veritex Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Fidelity DD Bancorp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity DD Bancorp are ranked lower than 3 (%) 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.

Pair Trading with Veritex Holdings and Fidelity

The main advantage of trading using opposite Veritex Holdings and Fidelity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Veritex Holdings 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.

The idea behind Veritex Holdings and Fidelity DD 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.