Correlation Between Fiserv and Fujitsu

Can any of the company-specific risk be diversified away by investing in both Fiserv and Fujitsu 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 Fiserv and Fujitsu into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fiserv Inc and Fujitsu Limited, you can compare the effects of market volatilities on Fiserv and Fujitsu 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 Fiserv with a short position of Fujitsu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fiserv and Fujitsu.

Diversification Opportunities for Fiserv and Fujitsu

-0.28

Correlation Coefficient

Fiserv  Fujitsu

Very good diversification

The 3 months correlation between Fiserv and Fujitsu is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Fiserv Inc and Fujitsu Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fujitsu Limited and Fiserv 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 Fiserv Inc are associated (or correlated) with Fujitsu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fujitsu Limited has no effect on the direction of Fiserv i.e., Fiserv and Fujitsu go up and down completely randomly.

Pair Corralation between Fiserv and Fujitsu

Given the investment horizon of 90 days Fiserv is expected to generate 1.55 times less return on investment than Fujitsu. But when comparing it to its historical volatility, Fiserv Inc is 5.96 times less risky than Fujitsu. It trades about 0.05 of its potential returns per unit of risk. Fujitsu Limited is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,920  in Fujitsu Limited on October 22, 2024 and sell it today you would lose (250.00) from holding Fujitsu Limited or give up 13.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Fiserv Inc  vs.  Fujitsu Limited

Fiserv Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fiserv Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Fiserv is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Fujitsu Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fujitsu Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Fujitsu is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Fiserv and Fujitsu

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

The idea behind Fiserv Inc and Fujitsu Limited 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.