Correlation Between Fidelity National and Charles Schwab

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

Diversification Opportunities for Fidelity National and Charles Schwab

0.25

Correlation Coefficient

Fidelity National  Charles Schwab

Modest diversification

The 3 months correlation between Fidelity and Charles is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity National Information and The Charles Schwab in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charles Schwab 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 Charles Schwab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charles Schwab has no effect on the direction of Fidelity National i.e., Fidelity National and Charles Schwab go up and down completely randomly.

Pair Corralation between Fidelity National and Charles Schwab

Assuming the 90 days trading horizon Fidelity National Information is expected to under-perform the Charles Schwab. In addition to that, Fidelity National is 1.68 times more volatile than The Charles Schwab. It trades about -0.05 of its total potential returns per unit of risk. The Charles Schwab is currently generating about 0.04 per unit of volatility. If you would invest  7,100  in The Charles Schwab on December 30, 2024 and sell it today you would earn a total of  256.00  from holding The Charles Schwab or generate 3.61% return on investment over 90 days.

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

Fidelity National Information  vs.  The Charles Schwab

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 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.

Charles Schwab

Risk-Adjusted Performance

Insignificant

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

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

The idea behind Fidelity National Information and The Charles Schwab 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.