Correlation Between Fidelity National and Stewart Information

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

By analyzing existing cross correlation between Fidelity National Financial and Stewart Information Services, you can compare the effects of market volatilities on Fidelity National and Stewart Information 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 Stewart Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity National and Stewart Information.

Diversification Opportunities for Fidelity National and Stewart Information

0.73

Correlation Coefficient

Fidelity National  Stewart Information

Poor diversification

The 3 months correlation between Fidelity and Stewart is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity National Financial and Stewart Information Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stewart Information 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 Financial are associated (or correlated) with Stewart Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stewart Information has no effect on the direction of Fidelity National i.e., Fidelity National and Stewart Information go up and down completely randomly.

Pair Corralation between Fidelity National and Stewart Information

Considering the 90-day investment horizon Fidelity National Financial is expected to generate 0.81 times more return on investment than Stewart Information. However, Fidelity National Financial is 1.23 times less risky than Stewart Information. It trades about 0.04 of its potential returns per unit of risk. Stewart Information Services is currently generating about -0.05 per unit of risk. If you would invest  6,250  in Fidelity National Financial on December 2, 2024 and sell it today you would earn a total of  203.00  from holding Fidelity National Financial or generate 3.25% return on investment over 90 days.

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

Fidelity National Financial  vs.  Stewart Information Services

Fidelity National

Risk-Adjusted Performance

Insignificant

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

Stewart Information

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stewart Information Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Stewart Information is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Fidelity National and Stewart Information

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

The idea behind Fidelity National Financial and Stewart Information Services 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..