Correlation Between James River and Fidelity National
Can any of the company-specific risk be diversified away by investing in both James River 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 James River and Fidelity National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between James River Group and Fidelity National Financial, you can compare the effects of market volatilities on James River 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 James River with a short position of Fidelity National. Check out your portfolio center. Please also check ongoing floating volatility patterns of James River and Fidelity National.
Diversification Opportunities for James River and Fidelity National
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between James and Fidelity is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding James River Group and Fidelity National Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity National and James River 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 James River Group 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 James River i.e., James River and Fidelity National go up and down completely randomly.
Pair Corralation between James River and Fidelity National
Given the investment horizon of 90 days James River Group is expected to under-perform the Fidelity National. In addition to that, James River is 4.69 times more volatile than Fidelity National Financial. It trades about -0.18 of its total potential returns per unit of risk. Fidelity National Financial is currently generating about 0.27 per unit of volatility. If you would invest 5,880 in Fidelity National Financial on September 2, 2024 and sell it today you would earn a total of 459.00 from holding Fidelity National Financial or generate 7.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
James River Group vs. Fidelity National Financial
Performance |
| Timeline |
| James River Group |
| Fidelity National |
James River and Fidelity National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with James River and Fidelity National
The main advantage of trading using opposite James River and Fidelity National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if James River 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.| James River vs. Employers Holdings | James River vs. AMERISAFE | James River vs. NMI Holdings | James River vs. Investors Title |
| Fidelity National vs. AXIS Capital Holdings | Fidelity National vs. Assured Guaranty | Fidelity National vs. Enact Holdings | Fidelity National vs. NMI Holdings |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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