Correlation Between Fidelity National and Focus Home

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

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

Diversification Opportunities for Fidelity National and Focus Home

-0.22

Correlation Coefficient

Fidelity National  Focus Home

Very good diversification

The 3 months correlation between Fidelity and Focus is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity National Information and Focus Home Interactive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Home Interactive 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 Information are associated (or correlated) with Focus Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Home Interactive has no effect on the direction of Fidelity National i.e., Fidelity National and Focus Home go up and down completely randomly.

Pair Corralation between Fidelity National and Focus Home

Assuming the 90 days trading horizon Fidelity National Information is expected to generate 0.39 times more return on investment than Focus Home. However, Fidelity National Information is 2.58 times less risky than Focus Home. It trades about 0.03 of its potential returns per unit of risk. Focus Home Interactive is currently generating about -0.02 per unit of risk. If you would invest  6,380  in Fidelity National Information on October 12, 2024 and sell it today you would earn a total of  1,245  from holding Fidelity National Information or generate 19.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Fidelity National Information  vs.  Focus Home Interactive

Fidelity National

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity National Information has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Fidelity National is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Focus Home Interactive

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Focus Home Interactive are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Focus Home may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Fidelity National and Focus Home

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

The idea behind Fidelity National Information and Focus Home Interactive 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.