Correlation Between Fidelity National and Maiden Holdings

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

Diversification Opportunities for Fidelity National and Maiden Holdings

0.6

Correlation Coefficient

Fidelity National  Maiden Holdings

Poor diversification

The 3 months correlation between Fidelity and Maiden is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity National Information and Maiden Holdings North in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maiden Holdings North 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 Maiden Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maiden Holdings North has no effect on the direction of Fidelity National i.e., Fidelity National and Maiden Holdings go up and down completely randomly.

Pair Corralation between Fidelity National and Maiden Holdings

Considering the 90-day investment horizon Fidelity National Information is expected to under-perform the Maiden Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Fidelity National Information is 1.6 times less risky than Maiden Holdings. The stock trades about -0.09 of its potential returns per unit of risk. The Maiden Holdings North is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,707  in Maiden Holdings North on October 8, 2024 and sell it today you would earn a total of  65.00  from holding Maiden Holdings North or generate 3.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Fidelity National Information  vs.  Maiden Holdings North

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.

Maiden Holdings North

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Maiden Holdings North are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Maiden Holdings is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Fidelity National and Maiden Holdings

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

The idea behind Fidelity National Information and Maiden Holdings North 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.