Correlation Between Fidelity and Berkshire Hills

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

Diversification Opportunities for Fidelity and Berkshire Hills

0.63

Correlation Coefficient

Fidelity  Berkshire Hills

Poor diversification

The 3 months correlation between Fidelity and Berkshire is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity DD Bancorp and Berkshire Hills Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hills 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 Berkshire Hills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkshire Hills Bancorp has no effect on the direction of Fidelity i.e., Fidelity and Berkshire Hills go up and down completely randomly.

Pair Corralation between Fidelity and Berkshire Hills

Given the investment horizon of 90 days Fidelity DD Bancorp is expected to generate 1.58 times more return on investment than Berkshire Hills. However, Fidelity is 1.58 times more volatile than Berkshire Hills Bancorp. It trades about -0.01 of its potential returns per unit of risk. Berkshire Hills Bancorp is currently generating about -0.01 per unit of risk. If you would invest  4,136  in Fidelity DD Bancorp on May 6, 2025 and sell it today you would lose (138.00) from holding Fidelity DD Bancorp or give up 3.34% of portfolio value over 90 days.

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

Fidelity DD Bancorp  vs.  Berkshire Hills Bancorp

Fidelity DD Bancorp

Risk-Adjusted Performance

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 rather sound fundamental drivers, Fidelity is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Berkshire Hills Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Berkshire Hills Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Berkshire Hills is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fidelity and Berkshire Hills

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

The idea behind Fidelity DD Bancorp and Berkshire Hills 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.