Correlation Between Trade Desk and Fidelity National

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Can any of the company-specific risk be diversified away by investing in both Trade Desk and Fidelity National 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 Trade Desk and Fidelity National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Trade Desk and Fidelity National Information, you can compare the effects of market volatilities on Trade Desk and Fidelity National 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 Trade Desk with a short position of Fidelity National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trade Desk and Fidelity National.

Diversification Opportunities for Trade Desk and Fidelity National

0.69
  Correlation Coefficient

Poor diversification

The 3 months correlation between Trade and Fidelity is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding The Trade Desk and Fidelity National Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity National and Trade Desk 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 The Trade Desk are associated (or correlated) with Fidelity National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity National has no effect on the direction of Trade Desk i.e., Trade Desk and Fidelity National go up and down completely randomly.

Pair Corralation between Trade Desk and Fidelity National

Assuming the 90 days trading horizon The Trade Desk is expected to generate 1.6 times more return on investment than Fidelity National. However, Trade Desk is 1.6 times more volatile than Fidelity National Information. It trades about 0.04 of its potential returns per unit of risk. Fidelity National Information is currently generating about 0.05 per unit of risk. If you would invest  748.00  in The Trade Desk on September 24, 2024 and sell it today you would earn a total of  12.00  from holding The Trade Desk or generate 1.6% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

The Trade Desk  vs.  Fidelity National Information

 Performance 
       Timeline  
Trade Desk 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in The Trade Desk are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Trade Desk sustained solid returns over the last few months and may actually be approaching a breakup point.
Fidelity National 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity National Information are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fidelity National may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Trade Desk and Fidelity National Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Trade Desk and Fidelity National

The main advantage of trading using opposite Trade Desk and Fidelity National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trade Desk position performs unexpectedly, Fidelity National 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 Fidelity National will offset losses from the drop in Fidelity National's long position.
The idea behind The Trade Desk and Fidelity National Information 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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