Correlation Between Fidelity National and Stanley Electric

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

Diversification Opportunities for Fidelity National and Stanley Electric

-0.08

Correlation Coefficient

Fidelity National  Stanley Electric

Good diversification

The 3 months correlation between Fidelity and Stanley is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity National Information and Stanley Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stanley Electric 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 Stanley Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stanley Electric has no effect on the direction of Fidelity National i.e., Fidelity National and Stanley Electric go up and down completely randomly.

Pair Corralation between Fidelity National and Stanley Electric

Assuming the 90 days trading horizon Fidelity National Information is expected to under-perform the Stanley Electric. But the stock apears to be less risky and, when comparing its historical volatility, Fidelity National Information is 1.03 times less risky than Stanley Electric. The stock trades about -0.15 of its potential returns per unit of risk. The Stanley Electric Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,540  in Stanley Electric Co on October 25, 2024 and sell it today you would earn a total of  40.00  from holding Stanley Electric Co or generate 2.6% 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.  Stanley Electric Co

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.

Stanley Electric

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stanley Electric Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Stanley Electric 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 Stanley Electric

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

The idea behind Fidelity National Information and Stanley Electric Co 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.