Correlation Between Fiserv and Experian Plc

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

By analyzing existing cross correlation between Fiserv Inc and Experian plc, you can compare the effects of market volatilities on Fiserv and Experian Plc 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 Experian Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fiserv and Experian Plc.

Diversification Opportunities for Fiserv and Experian Plc

0.83

Correlation Coefficient

Fiserv  Experian Plc

Very poor diversification

The 3 months correlation between Fiserv and Experian is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Fiserv Inc and Experian plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Experian plc 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 Experian Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Experian plc has no effect on the direction of Fiserv i.e., Fiserv and Experian Plc go up and down completely randomly.

Pair Corralation between Fiserv and Experian Plc

Assuming the 90 days horizon Fiserv is expected to generate 3.36 times less return on investment than Experian Plc. In addition to that, Fiserv is 1.06 times more volatile than Experian plc. It trades about 0.01 of its total potential returns per unit of risk. Experian plc is currently generating about 0.04 per unit of volatility. If you would invest  4,121  in Experian plc on December 30, 2024 and sell it today you would earn a total of  139.00  from holding Experian plc or generate 3.37% return on investment over 90 days.

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

Fiserv Inc  vs.  Experian plc

Fiserv Inc

Risk-Adjusted Performance

Very Weak

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

Experian plc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Experian plc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Experian Plc is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Fiserv and Experian Plc

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

The idea behind Fiserv Inc and Experian plc 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.