Correlation Between Fidelity National and CHIBA BANK

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

Diversification Opportunities for Fidelity National and CHIBA BANK

-0.06

Correlation Coefficient

Fidelity National  CHIBA BANK

Good diversification

The 3 months correlation between Fidelity and CHIBA is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity National Information and CHIBA BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHIBA BANK 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 CHIBA BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHIBA BANK has no effect on the direction of Fidelity National i.e., Fidelity National and CHIBA BANK go up and down completely randomly.

Pair Corralation between Fidelity National and CHIBA BANK

Assuming the 90 days trading horizon Fidelity National Information is expected to generate 0.8 times more return on investment than CHIBA BANK. However, Fidelity National Information is 1.26 times less risky than CHIBA BANK. It trades about -0.18 of its potential returns per unit of risk. CHIBA BANK is currently generating about -0.35 per unit of risk. If you would invest  7,996  in Fidelity National Information on October 6, 2024 and sell it today you would lose (254.00) from holding Fidelity National Information or give up 3.18% of portfolio value over 90 days.

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

Fidelity National Information  vs.  CHIBA BANK

Fidelity National

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity National Information are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

CHIBA BANK

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CHIBA BANK are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, CHIBA BANK is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Fidelity National and CHIBA BANK

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

The idea behind Fidelity National Information and CHIBA BANK 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.