Correlation Between Ford and Fidelity National

Can any of the company-specific risk be diversified away by investing in both Ford and Fidelity National 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 Ford and Fidelity National into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ford Motor and Fidelity National Information, you can compare the effects of market volatilities on Ford and Fidelity National 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 Ford with a short position of Fidelity National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Fidelity National.

Diversification Opportunities for Ford and Fidelity National

0.34

Correlation Coefficient

Ford  Fidelity National

Weak diversification

The 3 months correlation between Ford and Fidelity is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Fidelity National Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity National and Ford 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 Ford Motor are associated (or correlated) with Fidelity National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity National has no effect on the direction of Ford i.e., Ford and Fidelity National go up and down completely randomly.

Pair Corralation between Ford and Fidelity National

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Fidelity National. In addition to that, Ford is 1.91 times more volatile than Fidelity National Information. It trades about -0.07 of its total potential returns per unit of risk. Fidelity National Information is currently generating about 0.07 per unit of volatility. If you would invest  7,417  in Fidelity National Information on September 20, 2024 and sell it today you would earn a total of  354.00  from holding Fidelity National Information or generate 4.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Ford Motor  vs.  Fidelity National Information

Ford Motor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ford Motor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Fidelity National

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity National Information are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Fidelity National is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ford and Fidelity National

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

The idea behind Ford Motor and Fidelity National Information 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.