Correlation Between Fidelity National and AbbVie

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

Diversification Opportunities for Fidelity National and AbbVie

0.33

Correlation Coefficient

Fidelity National  AbbVie

Weak diversification

The 3 months correlation between Fidelity and AbbVie is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity National Information and AbbVie Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AbbVie Inc 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 AbbVie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AbbVie Inc has no effect on the direction of Fidelity National i.e., Fidelity National and AbbVie go up and down completely randomly.

Pair Corralation between Fidelity National and AbbVie

Assuming the 90 days trading horizon Fidelity National Information is expected to generate 0.6 times more return on investment than AbbVie. However, Fidelity National Information is 1.67 times less risky than AbbVie. It trades about 0.13 of its potential returns per unit of risk. AbbVie Inc is currently generating about 0.07 per unit of risk. If you would invest  2,600  in Fidelity National Information on September 29, 2024 and sell it today you would earn a total of  553.00  from holding Fidelity National Information or generate 21.27% return on investment over 90 days.

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

Fidelity National Information  vs.  AbbVie Inc

Fidelity National

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity National Information are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fidelity National may actually be approaching a critical reversion point that can send shares even higher in January 2025.

AbbVie Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AbbVie Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, AbbVie is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fidelity National and AbbVie

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

The idea behind Fidelity National Information and AbbVie Inc 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.