Correlation Between Fidelity National and Iberdrola
Can any of the company-specific risk be diversified away by investing in both Fidelity National and Iberdrola 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 Iberdrola 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 Iberdrola SA, you can compare the effects of market volatilities on Fidelity National and Iberdrola 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 Iberdrola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity National and Iberdrola.
Diversification Opportunities for Fidelity National and Iberdrola
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Fidelity and Iberdrola is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity National Information and Iberdrola SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iberdrola SA 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 Iberdrola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iberdrola SA has no effect on the direction of Fidelity National i.e., Fidelity National and Iberdrola go up and down completely randomly.
Pair Corralation between Fidelity National and Iberdrola
Assuming the 90 days trading horizon Fidelity National Information is expected to generate 1.18 times more return on investment than Iberdrola. However, Fidelity National is 1.18 times more volatile than Iberdrola SA. It trades about 0.11 of its potential returns per unit of risk. Iberdrola SA is currently generating about 0.07 per unit of risk. If you would invest 4,864 in Fidelity National Information on September 12, 2024 and sell it today you would earn a total of 3,019 from holding Fidelity National Information or generate 62.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity National Information vs. Iberdrola SA
Performance |
| Timeline |
| Fidelity National |
| Iberdrola SA |
Fidelity National and Iberdrola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity National and Iberdrola
The main advantage of trading using opposite Fidelity National and Iberdrola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity National position performs unexpectedly, Iberdrola 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 Iberdrola will offset losses from the drop in Iberdrola's long position.| Fidelity National vs. Apple Inc | Fidelity National vs. Apple Inc | Fidelity National vs. Apple Inc | Fidelity National vs. Apple Inc |
| Iberdrola vs. Dominion Energy | Iberdrola vs. Sempra | Iberdrola vs. Superior Plus Corp | Iberdrola 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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