Correlation Between CDW Corp and Fidelity National

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

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

Diversification Opportunities for CDW Corp and Fidelity National

-0.33

Correlation Coefficient

CDW Corp  Fidelity National

Very good diversification

The 3 months correlation between CDW and Fidelity is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding CDW Corp and Fidelity National Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity National and CDW Corp 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 CDW Corp 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 CDW Corp i.e., CDW Corp and Fidelity National go up and down completely randomly.

Pair Corralation between CDW Corp and Fidelity National

Considering the 90-day investment horizon CDW Corp is expected to under-perform the Fidelity National. In addition to that, CDW Corp is 2.08 times more volatile than Fidelity National Information. It trades about -0.17 of its total potential returns per unit of risk. Fidelity National Information is currently generating about 0.07 per unit of volatility. If you would invest  8,209  in Fidelity National Information on August 30, 2024 and sell it today you would earn a total of  346.00  from holding Fidelity National Information or generate 4.21% return on investment over 90 days.

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

CDW Corp  vs.  Fidelity National Information

CDW Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CDW Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Fidelity National

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity National Information are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward indicators, Fidelity National is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CDW Corp and Fidelity National

The main advantage of trading using opposite CDW Corp and Fidelity National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDW Corp 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 CDW Corp 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.