Correlation Between Fiserv and Fidelity National
Can any of the company-specific risk be diversified away by investing in both Fiserv 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 Fiserv and Fidelity National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fiserv Inc and Fidelity National Information, you can compare the effects of market volatilities on Fiserv 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 Fiserv with a short position of Fidelity National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fiserv and Fidelity National.
Diversification Opportunities for Fiserv and Fidelity National
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fiserv and Fidelity is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Fiserv Inc and Fidelity National Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity National and Fiserv 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 Fiserv Inc 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 Fiserv i.e., Fiserv and Fidelity National go up and down completely randomly.
Pair Corralation between Fiserv and Fidelity National
Assuming the 90 days horizon Fiserv Inc is expected to generate 0.74 times more return on investment than Fidelity National. However, Fiserv Inc is 1.36 times less risky than Fidelity National. It trades about 0.12 of its potential returns per unit of risk. Fidelity National Information is currently generating about 0.04 per unit of risk. If you would invest 9,558 in Fiserv Inc on August 28, 2024 and sell it today you would earn a total of 11,562 from holding Fiserv Inc or generate 120.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fiserv Inc vs. Fidelity National Information
Performance |
| Timeline |
| Fiserv Inc |
| Fidelity National |
Fiserv and Fidelity National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fiserv and Fidelity National
The main advantage of trading using opposite Fiserv and Fidelity National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fiserv 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.The idea behind Fiserv Inc and Fidelity National Information 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.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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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