Correlation Between DOCDATA and Fidelity National

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

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

Diversification Opportunities for DOCDATA and Fidelity National

0.25

Correlation Coefficient

DOCDATA  Fidelity National

Modest diversification

The 3 months correlation between DOCDATA and Fidelity is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding DOCDATA and Fidelity National Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity National and DOCDATA 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 DOCDATA 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 DOCDATA i.e., DOCDATA and Fidelity National go up and down completely randomly.

Pair Corralation between DOCDATA and Fidelity National

Assuming the 90 days trading horizon DOCDATA is expected to under-perform the Fidelity National. In addition to that, DOCDATA is 3.09 times more volatile than Fidelity National Information. It trades about -0.03 of its total potential returns per unit of risk. Fidelity National Information is currently generating about -0.02 per unit of volatility. If you would invest  7,828  in Fidelity National Information on October 7, 2024 and sell it today you would lose (86.00) from holding Fidelity National Information or give up 1.1% of portfolio value over 90 days.

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

DOCDATA  vs.  Fidelity National Information

DOCDATA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DOCDATA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Fidelity National

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity National Information are ranked lower than 2 (%) 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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with DOCDATA and Fidelity National

The main advantage of trading using opposite DOCDATA and Fidelity National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DOCDATA 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 DOCDATA 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.