Correlation Between Fidelity National and National Bank
Can any of the company-specific risk be diversified away by investing in both Fidelity National and National Bank 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 National Bank 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 National Bank Holdings, you can compare the effects of market volatilities on Fidelity National and National Bank 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 National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity National and National Bank.
Diversification Opportunities for Fidelity National and National Bank
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and National is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity National Information and National Bank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank Holdings 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 National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank Holdings has no effect on the direction of Fidelity National i.e., Fidelity National and National Bank go up and down completely randomly.
Pair Corralation between Fidelity National and National Bank
Assuming the 90 days trading horizon Fidelity National Information is expected to generate 0.77 times more return on investment than National Bank. However, Fidelity National Information is 1.3 times less risky than National Bank. It trades about 0.04 of its potential returns per unit of risk. National Bank Holdings is currently generating about 0.03 per unit of risk. If you would invest 6,236 in Fidelity National Information on September 5, 2024 and sell it today you would earn a total of 1,864 from holding Fidelity National Information or generate 29.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity National Information vs. National Bank Holdings
Performance |
| Timeline |
| Fidelity National |
| National Bank Holdings |
Fidelity National and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity National and National Bank
The main advantage of trading using opposite Fidelity National and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity National position performs unexpectedly, National Bank 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 National Bank will offset losses from the drop in National Bank's long position.| Fidelity National vs. Apple Inc | Fidelity National vs. Apple Inc | Fidelity National vs. Apple Inc | Fidelity National vs. Apple Inc |
| National Bank vs. AM EAGLE OUTFITTERS | National Bank vs. PSI Software AG | National Bank vs. AXWAY SOFTWARE EO | National Bank vs. CyberArk Software |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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