Correlation Between Fidelity National and Makita

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

Diversification Opportunities for Fidelity National and Makita

0.16

Correlation Coefficient

Fidelity National  Makita

Average diversification

The 3 months correlation between Fidelity and Makita is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity National Information and Makita in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Makita 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 Makita. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Makita has no effect on the direction of Fidelity National i.e., Fidelity National and Makita go up and down completely randomly.

Pair Corralation between Fidelity National and Makita

Assuming the 90 days trading horizon Fidelity National is expected to generate 10.38 times less return on investment than Makita. But when comparing it to its historical volatility, Fidelity National Information is 3.23 times less risky than Makita. It trades about 0.02 of its potential returns per unit of risk. Makita is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  721.00  in Makita on October 24, 2024 and sell it today you would earn a total of  2,093  from holding Makita or generate 290.29% return on investment over 90 days.

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

Fidelity National Information  vs.  Makita

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.

Makita

Risk-Adjusted Performance

1 of 100

Weak

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

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

The idea behind Fidelity National Information and Makita 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.