Correlation Between Fidelity National and Tiptree

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

Diversification Opportunities for Fidelity National and Tiptree

0.29

Correlation Coefficient

Fidelity National  Tiptree

Modest diversification

The 3 months correlation between Fidelity and Tiptree is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity National Financial and Tiptree in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiptree 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 Tiptree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tiptree has no effect on the direction of Fidelity National i.e., Fidelity National and Tiptree go up and down completely randomly.

Pair Corralation between Fidelity National and Tiptree

Considering the 90-day investment horizon Fidelity National is expected to generate 1.02 times less return on investment than Tiptree. But when comparing it to its historical volatility, Fidelity National Financial is 1.39 times less risky than Tiptree. It trades about 0.07 of its potential returns per unit of risk. Tiptree is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,393  in Tiptree on September 30, 2024 and sell it today you would earn a total of  677.00  from holding Tiptree or generate 48.6% return on investment over 90 days.

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

Fidelity National Financial  vs.  Tiptree

Fidelity National

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity National Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Tiptree

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tiptree are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Tiptree may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Fidelity National and Tiptree

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

The idea behind Fidelity National Financial and Tiptree 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.