Correlation Between Fidelity National and CDW Corp

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

Diversification Opportunities for Fidelity National and CDW Corp

0.38

Correlation Coefficient

Fidelity National  CDW Corp

Weak diversification

The 3 months correlation between Fidelity and CDW is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity National Information and CDW Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDW Corp 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 CDW Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDW Corp has no effect on the direction of Fidelity National i.e., Fidelity National and CDW Corp go up and down completely randomly.

Pair Corralation between Fidelity National and CDW Corp

Considering the 90-day investment horizon Fidelity National Information is expected to under-perform the CDW Corp. In addition to that, Fidelity National is 1.18 times more volatile than CDW Corp. It trades about -0.04 of its total potential returns per unit of risk. CDW Corp is currently generating about -0.04 per unit of volatility. If you would invest  17,277  in CDW Corp on December 28, 2024 and sell it today you would lose (893.00) from holding CDW Corp or give up 5.17% of portfolio value over 90 days.

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

Fidelity National Information  vs.  CDW Corp

Fidelity National

Risk-Adjusted Performance

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.

CDW Corp

Risk-Adjusted Performance

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 fairly stable fundamental indicators, CDW Corp is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Fidelity National and CDW Corp

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

The idea behind Fidelity National Information and CDW Corp 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..