Correlation Between Fidelity National and Applied Digital

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

Diversification Opportunities for Fidelity National and Applied Digital

-0.33

Correlation Coefficient

Fidelity National  Applied Digital

Very good diversification

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

Pair Corralation between Fidelity National and Applied Digital

Considering the 90-day investment horizon Fidelity National Information is expected to generate 0.17 times more return on investment than Applied Digital. However, Fidelity National Information is 5.73 times less risky than Applied Digital. It trades about -0.26 of its potential returns per unit of risk. Applied Digital is currently generating about -0.17 per unit of risk. If you would invest  8,513  in Fidelity National Information on October 6, 2024 and sell it today you would lose (487.00) from holding Fidelity National Information or give up 5.72% of portfolio value over 90 days.

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

Fidelity National Information  vs.  Applied Digital

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 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.

Applied Digital

Risk-Adjusted Performance

7 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Digital are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting essential indicators, Applied Digital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fidelity National and Applied Digital

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

The idea behind Fidelity National Information and Applied Digital 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.