Correlation Between Fidelity National and AP Mller

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

Diversification Opportunities for Fidelity National and AP Mller

-0.17

Correlation Coefficient

Fidelity National  AP Mller

Good diversification

The 3 months correlation between Fidelity and DP4A is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity National Information and AP Mller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AP Mller 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 AP Mller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AP Mller has no effect on the direction of Fidelity National i.e., Fidelity National and AP Mller go up and down completely randomly.

Pair Corralation between Fidelity National and AP Mller

Assuming the 90 days trading horizon Fidelity National is expected to generate 1.27 times less return on investment than AP Mller. But when comparing it to its historical volatility, Fidelity National Information is 2.75 times less risky than AP Mller. It trades about 0.08 of its potential returns per unit of risk. AP Mller is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  97,962  in AP Mller on October 24, 2024 and sell it today you would earn a total of  37,138  from holding AP Mller or generate 37.91% 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.  AP Mller

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 latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

AP Mller

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AP Mller are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, AP Mller 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 AP Mller

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

The idea behind Fidelity National Information and AP Mller 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.