Correlation Between Fidelity National and Air Products
Can any of the company-specific risk be diversified away by investing in both Fidelity National and Air Products 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 National and Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity National Information and Air Products Chemicals, you can compare the effects of market volatilities on Fidelity National and Air Products 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 National with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity National and Air Products.
Diversification Opportunities for Fidelity National and Air Products
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fidelity and Air is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity National Information and Air Products Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products Chemicals and Fidelity National 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 National Information are associated (or correlated) with Air Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Products Chemicals has no effect on the direction of Fidelity National i.e., Fidelity National and Air Products go up and down completely randomly.
Pair Corralation between Fidelity National and Air Products
Assuming the 90 days trading horizon Fidelity National Information is expected to under-perform the Air Products. But the stock apears to be less risky and, when comparing its historical volatility, Fidelity National Information is 1.36 times less risky than Air Products. The stock trades about -0.2 of its potential returns per unit of risk. The Air Products Chemicals is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 31,933 in Air Products Chemicals on October 24, 2024 and sell it today you would earn a total of 64.00 from holding Air Products Chemicals or generate 0.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity National Information vs. Air Products Chemicals
Performance |
| Timeline |
| Fidelity National |
| Air Products Chemicals |
Fidelity National and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity National and Air Products
The main advantage of trading using opposite Fidelity National and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity National position performs unexpectedly, Air Products 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 Air Products will offset losses from the drop in Air Products' long position.| Fidelity National vs. First Class Metals | Fidelity National vs. Capital Metals PLC | Fidelity National vs. Wheaton Precious Metals | Fidelity National vs. Darden Restaurants |
| Air Products vs. Morgan Advanced Materials | Air Products vs. Worldwide Healthcare Trust | Air Products vs. Abingdon Health Plc | Air Products vs. BE Semiconductor Industries |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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