Correlation Between Federal Realty and Fidelity National
Can any of the company-specific risk be diversified away by investing in both Federal Realty and Fidelity National 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 Federal Realty and Fidelity National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Realty Investment and Fidelity National Information, you can compare the effects of market volatilities on Federal Realty and Fidelity National 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 Federal Realty with a short position of Fidelity National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Realty and Fidelity National.
Diversification Opportunities for Federal Realty and Fidelity National
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Federal and Fidelity is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Federal Realty Investment and Fidelity National Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity National and Federal Realty 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 Federal Realty Investment are associated (or correlated) with Fidelity National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity National has no effect on the direction of Federal Realty i.e., Federal Realty and Fidelity National go up and down completely randomly.
Pair Corralation between Federal Realty and Fidelity National
Assuming the 90 days trading horizon Federal Realty Investment is expected to generate 1.33 times more return on investment than Fidelity National. However, Federal Realty is 1.33 times more volatile than Fidelity National Information. It trades about 0.04 of its potential returns per unit of risk. Fidelity National Information is currently generating about -0.24 per unit of risk. If you would invest 11,265 in Federal Realty Investment on September 20, 2024 and sell it today you would earn a total of 95.00 from holding Federal Realty Investment or generate 0.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Federal Realty Investment vs. Fidelity National Information
Performance |
| Timeline |
| Federal Realty Investment |
| Fidelity National |
Federal Realty and Fidelity National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Realty and Fidelity National
The main advantage of trading using opposite Federal Realty and Fidelity National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Realty position performs unexpectedly, Fidelity National 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 National will offset losses from the drop in Fidelity National's long position.| Federal Realty vs. Albion Technology General | Federal Realty vs. Take Two Interactive Software | Federal Realty vs. Polar Capital Technology | Federal Realty vs. Cellnex Telecom SA |
| Fidelity National vs. Federal Realty Investment | Fidelity National vs. Zoom Video Communications | Fidelity National vs. New Residential Investment | Fidelity National vs. FC Investment Trust |
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 the Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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