Correlation Between Fidelity National and Legal General

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

Diversification Opportunities for Fidelity National and Legal General

-0.38

Correlation Coefficient

Fidelity National  Legal General

Very good diversification

The 3 months correlation between Fidelity and Legal is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity National Information and Legal General Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legal General Group 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 Legal General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legal General Group has no effect on the direction of Fidelity National i.e., Fidelity National and Legal General go up and down completely randomly.

Pair Corralation between Fidelity National and Legal General

Assuming the 90 days trading horizon Fidelity National Information is expected to under-perform the Legal General. In addition to that, Fidelity National is 1.18 times more volatile than Legal General Group. It trades about -0.33 of its total potential returns per unit of risk. Legal General Group is currently generating about -0.17 per unit of volatility. If you would invest  23,600  in Legal General Group on October 10, 2024 and sell it today you would lose (580.00) from holding Legal General Group or give up 2.46% of portfolio value over 90 days.

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

Fidelity National Information  vs.  Legal General Group

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 latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Legal General Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Legal General Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Legal General 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 Legal General

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

The idea behind Fidelity National Information and Legal General Group 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.