Correlation Between Fidelity National and Cass Information

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

Diversification Opportunities for Fidelity National and Cass Information

-0.17

Correlation Coefficient

Fidelity National  Cass Information

Good diversification

The 3 months correlation between Fidelity and Cass is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity National Information and Cass Information Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cass Information Systems 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 Cass Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cass Information Systems has no effect on the direction of Fidelity National i.e., Fidelity National and Cass Information go up and down completely randomly.

Pair Corralation between Fidelity National and Cass Information

Assuming the 90 days trading horizon Fidelity National Information is expected to under-perform the Cass Information. In addition to that, Fidelity National is 2.95 times more volatile than Cass Information Systems. It trades about -0.14 of its total potential returns per unit of risk. Cass Information Systems is currently generating about 0.13 per unit of volatility. If you would invest  3,980  in Cass Information Systems on November 29, 2024 and sell it today you would earn a total of  160.00  from holding Cass Information Systems or generate 4.02% return on investment over 90 days.

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

Fidelity National Information  vs.  Cass Information Systems

Fidelity National

Risk-Adjusted Performance

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Cass Information Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cass Information Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Cass Information is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Fidelity National and Cass Information

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

The idea behind Fidelity National Information and Cass Information Systems 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.