Correlation Between Radian and Fidelity National
Can any of the company-specific risk be diversified away by investing in both Radian 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 Radian and Fidelity National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Radian Group and Fidelity National Financial, you can compare the effects of market volatilities on Radian 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 Radian with a short position of Fidelity National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Radian and Fidelity National.
Diversification Opportunities for Radian and Fidelity National
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Radian and Fidelity is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Radian 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 Radian 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 Radian 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 Radian i.e., Radian and Fidelity National go up and down completely randomly.
Pair Corralation between Radian and Fidelity National
Considering the 90-day investment horizon Radian is expected to generate 1.04 times less return on investment than Fidelity National. In addition to that, Radian is 1.16 times more volatile than Fidelity National Financial. It trades about 0.05 of its total potential returns per unit of risk. Fidelity National Financial is currently generating about 0.06 per unit of volatility. If you would invest 4,719 in Fidelity National Financial on November 9, 2024 and sell it today you would earn a total of 1,128 from holding Fidelity National Financial or generate 23.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Radian Group vs. Fidelity National Financial
Performance |
| Timeline |
| Radian Group |
| Fidelity National |
Radian and Fidelity National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Radian and Fidelity National
The main advantage of trading using opposite Radian and Fidelity National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Radian 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 Radian Group and Fidelity National Financial 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.| 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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