Correlation Between Fidelity National and First American
Can any of the company-specific risk be diversified away by investing in both Fidelity National and First American 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 First American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity National Financial and First American, you can compare the effects of market volatilities on Fidelity National and First American 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 First American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity National and First American.
Diversification Opportunities for Fidelity National and First American
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fidelity and First is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity National Financial and First American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First American 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 Financial are associated (or correlated) with First American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First American has no effect on the direction of Fidelity National i.e., Fidelity National and First American go up and down completely randomly.
Pair Corralation between Fidelity National and First American
Considering the 90-day investment horizon Fidelity National Financial is expected to generate 0.95 times more return on investment than First American. However, Fidelity National Financial is 1.05 times less risky than First American. It trades about 0.13 of its potential returns per unit of risk. First American is currently generating about 0.05 per unit of risk. If you would invest 3,328 in Fidelity National Financial on August 31, 2024 and sell it today you would earn a total of 3,011 from holding Fidelity National Financial or generate 90.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity National Financial vs. First American
Performance |
| Timeline |
| Fidelity National |
| First American |
Fidelity National and First American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity National and First American
The main advantage of trading using opposite Fidelity National and First American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity National position performs unexpectedly, First American 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 First American will offset losses from the drop in First American's long position.| Fidelity National vs. AXIS Capital Holdings | Fidelity National vs. Assured Guaranty | Fidelity National vs. Enact Holdings | Fidelity National vs. NMI Holdings |
| First American vs. Fidelity National Financial | First American vs. Stewart Information Services | First American vs. Old Republic International | First American vs. American Financial Group |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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