Correlation Between Fidelity 500 and Howard Bancorp

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Can any of the company-specific risk be diversified away by investing in both Fidelity 500 and Howard 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 500 and Howard Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity 500 Index and Howard Bancorp, you can compare the effects of market volatilities on Fidelity 500 and Howard 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 500 with a short position of Howard Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity 500 and Howard Bancorp.

Diversification Opportunities for Fidelity 500 and Howard Bancorp

-0.77
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Fidelity and Howard is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity 500 Index and Howard Bancorp Inc in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Howard Bancorp and Fidelity 500 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 500 Index are associated (or correlated) with Howard Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Howard Bancorp has no effect on the direction of Fidelity 500 i.e., Fidelity 500 and Howard Bancorp go up and down completely randomly.

Pair Corralation between Fidelity 500 and Howard Bancorp

Assuming the 90 days horizon Fidelity 500 is expected to generate 3.82 times less return on investment than Howard Bancorp. But when comparing it to its historical volatility, Fidelity 500 Index is 2.66 times less risky than Howard Bancorp. It trades about 0.06 of its potential returns per unit of risk. Howard Bancorp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,031  in Howard Bancorp on February 18, 2022 and sell it today you would earn a total of  1,299  from holding Howard Bancorp or generate 125.99% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy83.97%
ValuesDaily Returns

Fidelity 500 Index  vs.  Howard Bancorp Inc

 Performance (%) 
      Timeline 
Fidelity 500 Index 
Fidelity Performance
0 of 100
Over the last 90 days Fidelity 500 Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Fidelity Price Channel

Howard Bancorp 
Howard Performance
0 of 100
Over the last 90 days Howard Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Howard Bancorp is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Fidelity 500 and Howard Bancorp Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Fidelity 500 and Howard Bancorp

The main advantage of trading using opposite Fidelity 500 and Howard Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity 500 position performs unexpectedly, Howard 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 Howard Bancorp will offset losses from the drop in Howard Bancorp's long position.

Fidelity 500 Index

Pair trading matchups for Fidelity 500

The idea behind Fidelity 500 Index and Howard 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.

Howard Bancorp

Pair trading matchups for Howard Bancorp

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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