Correlation Between Seagate Technology and Fiserv

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

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

Diversification Opportunities for Seagate Technology and Fiserv

0.18

Correlation Coefficient

Seagate Technology  Fiserv

Average diversification

The 3 months correlation between Seagate and Fiserv is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Seagate Technology Holdings and Fiserv Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fiserv Inc and Seagate Technology 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 Seagate Technology Holdings are associated (or correlated) with Fiserv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fiserv Inc has no effect on the direction of Seagate Technology i.e., Seagate Technology and Fiserv go up and down completely randomly.

Pair Corralation between Seagate Technology and Fiserv

Assuming the 90 days trading horizon Seagate Technology Holdings is expected to under-perform the Fiserv. In addition to that, Seagate Technology is 1.71 times more volatile than Fiserv Inc. It trades about -0.03 of its total potential returns per unit of risk. Fiserv Inc is currently generating about 0.01 per unit of volatility. If you would invest  63,063  in Fiserv Inc on December 24, 2024 and sell it today you would earn a total of  55.00  from holding Fiserv Inc or generate 0.09% return on investment over 90 days.

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

Seagate Technology Holdings  vs.  Fiserv Inc

Seagate Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Seagate Technology Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Seagate Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 somewhat strong forward indicators, Fiserv is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Seagate Technology and Fiserv

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

The idea behind Seagate Technology Holdings and Fiserv Inc 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 Stocks Directory module to find actively traded stocks across global markets.