Correlation Between Fidelity National and Best Buy

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

Diversification Opportunities for Fidelity National and Best Buy

-0.14

Correlation Coefficient

Fidelity National  Best Buy

Good diversification

The 3 months correlation between Fidelity and Best is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity National Information and Best Buy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Best Buy 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 Best Buy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Best Buy has no effect on the direction of Fidelity National i.e., Fidelity National and Best Buy go up and down completely randomly.

Pair Corralation between Fidelity National and Best Buy

Assuming the 90 days trading horizon Fidelity National Information is expected to generate 0.99 times more return on investment than Best Buy. However, Fidelity National Information is 1.01 times less risky than Best Buy. It trades about 0.11 of its potential returns per unit of risk. Best Buy Co is currently generating about -0.01 per unit of risk. If you would invest  2,911  in Fidelity National Information on September 18, 2024 and sell it today you would earn a total of  260.00  from holding Fidelity National Information or generate 8.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.16%
Values	Daily Returns

Fidelity National Information  vs.  Best Buy Co

Fidelity National

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity National Information are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fidelity National may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Best Buy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Best Buy Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Best Buy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fidelity National and Best Buy

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

The idea behind Fidelity National Information and Best Buy 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.