Correlation Between Fidelity National and World Chess

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

Diversification Opportunities for Fidelity National and World Chess

-0.61

Correlation Coefficient

Fidelity National  World Chess

Excellent diversification

The 3 months correlation between Fidelity and World is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity National Information and World Chess PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Chess PLC 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 World Chess. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Chess PLC has no effect on the direction of Fidelity National i.e., Fidelity National and World Chess go up and down completely randomly.

Pair Corralation between Fidelity National and World Chess

Assuming the 90 days trading horizon Fidelity National Information is expected to under-perform the World Chess. But the stock apears to be less risky and, when comparing its historical volatility, Fidelity National Information is 6.76 times less risky than World Chess. The stock trades about -0.22 of its potential returns per unit of risk. The World Chess PLC is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  375.00  in World Chess PLC on September 12, 2024 and sell it today you would earn a total of  75.00  from holding World Chess PLC or generate 20.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Fidelity National Information  vs.  World Chess PLC

Fidelity National

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity National Information are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

World Chess PLC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Fidelity National and World Chess

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

The idea behind Fidelity National Information and World Chess PLC 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.