Correlation Between Fidelity National and Alibaba Group
Can any of the company-specific risk be diversified away by investing in both Fidelity National and Alibaba Group 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 Alibaba Group 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 Alibaba Group Holding, you can compare the effects of market volatilities on Fidelity National and Alibaba Group 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 Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity National and Alibaba Group.
Diversification Opportunities for Fidelity National and Alibaba Group
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Fidelity and Alibaba is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity National Information and Alibaba Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alibaba Group Holding 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 Alibaba Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alibaba Group Holding has no effect on the direction of Fidelity National i.e., Fidelity National and Alibaba Group go up and down completely randomly.
Pair Corralation between Fidelity National and Alibaba Group
Assuming the 90 days trading horizon Fidelity National is expected to generate 1.29 times less return on investment than Alibaba Group. But when comparing it to its historical volatility, Fidelity National Information is 2.05 times less risky than Alibaba Group. It trades about 0.15 of its potential returns per unit of risk. Alibaba Group Holding is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,420 in Alibaba Group Holding on August 30, 2024 and sell it today you would earn a total of 400.00 from holding Alibaba Group Holding or generate 28.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity National Information vs. Alibaba Group Holding
Performance |
| Timeline |
| Fidelity National |
| Alibaba Group Holding |
Fidelity National and Alibaba Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity National and Alibaba Group
The main advantage of trading using opposite Fidelity National and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity National position performs unexpectedly, Alibaba Group 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 Alibaba Group will offset losses from the drop in Alibaba Group's long position.| Fidelity National vs. United Rentals | Fidelity National vs. GP Investments | Fidelity National vs. HDFC Bank Limited | Fidelity National vs. Bread Financial Holdings |
| Alibaba Group vs. Take Two Interactive Software | Alibaba Group vs. Fidelity National Information | Alibaba Group vs. Micron Technology | Alibaba Group vs. G2D Investments |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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