Correlation Between Aqua America and Fidelity National

Can any of the company-specific risk be diversified away by investing in both Aqua America and Fidelity National 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 Aqua America and Fidelity National into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aqua America and Fidelity National Information, you can compare the effects of market volatilities on Aqua America and Fidelity National 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 Aqua America with a short position of Fidelity National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqua America and Fidelity National.

Diversification Opportunities for Aqua America and Fidelity National

0.48

Correlation Coefficient

Aqua America  Fidelity National

Very weak diversification

The 3 months correlation between Aqua and Fidelity is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Aqua America and Fidelity National Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity National and Aqua America 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 Aqua America are associated (or correlated) with Fidelity National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity National has no effect on the direction of Aqua America i.e., Aqua America and Fidelity National go up and down completely randomly.

Pair Corralation between Aqua America and Fidelity National

Assuming the 90 days horizon Aqua America is expected to under-perform the Fidelity National. In addition to that, Aqua America is 1.44 times more volatile than Fidelity National Information. It trades about -0.1 of its total potential returns per unit of risk. Fidelity National Information is currently generating about -0.13 per unit of volatility. If you would invest  7,768  in Fidelity National Information on October 22, 2024 and sell it today you would lose (138.00) from holding Fidelity National Information or give up 1.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Aqua America  vs.  Fidelity National Information

Aqua America

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aqua America has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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 uncertain 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.

Pair Trading with Aqua America and Fidelity National

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

The idea behind Aqua America and Fidelity National Information 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.