Correlation Between Fidelity National and Toyota

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

Diversification Opportunities for Fidelity National and Toyota

0.24

Correlation Coefficient

Fidelity National  Toyota

Modest diversification

The 3 months correlation between Fidelity and Toyota is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity National Information and Toyota Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toyota Motor 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 Toyota. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toyota Motor has no effect on the direction of Fidelity National i.e., Fidelity National and Toyota go up and down completely randomly.

Pair Corralation between Fidelity National and Toyota

Assuming the 90 days trading horizon Fidelity National Information is expected to generate 0.7 times more return on investment than Toyota. However, Fidelity National Information is 1.42 times less risky than Toyota. It trades about 0.12 of its potential returns per unit of risk. Toyota Motor is currently generating about 0.07 per unit of risk. If you would invest  2,953  in Fidelity National Information on September 12, 2024 and sell it today you would earn a total of  287.00  from holding Fidelity National Information or generate 9.72% 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.  Toyota Motor

Fidelity National

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity National Information are ranked lower than 9 (%) 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.

Toyota Motor

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Toyota Motor are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Toyota may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Fidelity National and Toyota

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

The idea behind Fidelity National Information and Toyota Motor 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.