Correlation Between Fidelity National and Airbus SE
Can any of the company-specific risk be diversified away by investing in both Fidelity National and Airbus SE 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 Airbus SE 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 Airbus SE, you can compare the effects of market volatilities on Fidelity National and Airbus SE 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 Airbus SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity National and Airbus SE.
Diversification Opportunities for Fidelity National and Airbus SE
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fidelity and Airbus is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity National Information and Airbus SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbus SE 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 Airbus SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airbus SE has no effect on the direction of Fidelity National i.e., Fidelity National and Airbus SE go up and down completely randomly.
Pair Corralation between Fidelity National and Airbus SE
Assuming the 90 days trading horizon Fidelity National is expected to generate 2.65 times less return on investment than Airbus SE. But when comparing it to its historical volatility, Fidelity National Information is 1.41 times less risky than Airbus SE. It trades about 0.1 of its potential returns per unit of risk. Airbus SE is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 13,090 in Airbus SE on September 12, 2024 and sell it today you would earn a total of 2,538 from holding Airbus SE or generate 19.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity National Information vs. Airbus SE
Performance |
| Timeline |
| Fidelity National |
| Airbus SE |
Fidelity National and Airbus SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity National and Airbus SE
The main advantage of trading using opposite Fidelity National and Airbus SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity National position performs unexpectedly, Airbus SE 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 Airbus SE will offset losses from the drop in Airbus SE's long position.| Fidelity National vs. Apple Inc | Fidelity National vs. Apple Inc | Fidelity National vs. Apple Inc | Fidelity National vs. Apple Inc |
| Airbus SE vs. Airbus SE | Airbus SE vs. Superior Plus Corp | Airbus SE vs. Origin Agritech | Airbus SE vs. INTUITIVE SURGICAL |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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