Correlation Between Fidelity National and CarMax
Can any of the company-specific risk be diversified away by investing in both Fidelity National and CarMax 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 CarMax 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 CarMax Inc, you can compare the effects of market volatilities on Fidelity National and CarMax 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 CarMax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity National and CarMax.
Diversification Opportunities for Fidelity National and CarMax
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fidelity and CarMax is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity National Information and CarMax Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarMax Inc 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 CarMax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarMax Inc has no effect on the direction of Fidelity National i.e., Fidelity National and CarMax go up and down completely randomly.
Pair Corralation between Fidelity National and CarMax
Assuming the 90 days trading horizon Fidelity National Information is expected to under-perform the CarMax. But the stock apears to be less risky and, when comparing its historical volatility, Fidelity National Information is 2.74 times less risky than CarMax. The stock trades about -0.22 of its potential returns per unit of risk. The CarMax Inc is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 7,655 in CarMax Inc on September 12, 2024 and sell it today you would earn a total of 1,074 from holding CarMax Inc or generate 14.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity National Information vs. CarMax Inc
Performance |
| Timeline |
| Fidelity National |
| CarMax Inc |
Fidelity National and CarMax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity National and CarMax
The main advantage of trading using opposite Fidelity National and CarMax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity National position performs unexpectedly, CarMax 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 CarMax will offset losses from the drop in CarMax's long position.| Fidelity National vs. Telecom Italia SpA | Fidelity National vs. Anglesey Mining | Fidelity National vs. Wheaton Precious Metals | Fidelity National vs. Silvercorp Metals |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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