Correlation Between Fidelity National and Givaudan

Can any of the company-specific risk be diversified away by investing in both Fidelity National and Givaudan 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 Givaudan 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 Givaudan SA, you can compare the effects of market volatilities on Fidelity National and Givaudan 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 Givaudan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity National and Givaudan.

Diversification Opportunities for Fidelity National and Givaudan

0.07

Correlation Coefficient

Fidelity National  Givaudan

Significant diversification

The 3 months correlation between Fidelity and Givaudan is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity National Information and Givaudan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan 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 Givaudan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Givaudan SA has no effect on the direction of Fidelity National i.e., Fidelity National and Givaudan go up and down completely randomly.

Pair Corralation between Fidelity National and Givaudan

Assuming the 90 days trading horizon Fidelity National Information is expected to under-perform the Givaudan. But the stock apears to be less risky and, when comparing its historical volatility, Fidelity National Information is 1.37 times less risky than Givaudan. The stock trades about -0.23 of its potential returns per unit of risk. The Givaudan SA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  386,750  in Givaudan SA on September 30, 2024 and sell it today you would earn a total of  6,850  from holding Givaudan SA or generate 1.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Fidelity National Information  vs.  Givaudan SA

Fidelity National

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity National Information has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Fidelity National is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Givaudan SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Givaudan SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Fidelity National and Givaudan

The main advantage of trading using opposite Fidelity National and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity National position performs unexpectedly, Givaudan 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 Givaudan will offset losses from the drop in Givaudan's long position.

The idea behind Fidelity National Information and Givaudan SA 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.

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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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.