Correlation Between Fidelity National and Capgemini

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

Diversification Opportunities for Fidelity National and Capgemini

-0.42

Correlation Coefficient

Fidelity National  Capgemini

Very good diversification

The 3 months correlation between Fidelity and Capgemini is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity National Information and Capgemini SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capgemini SE ADR 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 Capgemini. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capgemini SE ADR has no effect on the direction of Fidelity National i.e., Fidelity National and Capgemini go up and down completely randomly.

Pair Corralation between Fidelity National and Capgemini

Considering the 90-day investment horizon Fidelity National Information is expected to generate 0.54 times more return on investment than Capgemini. However, Fidelity National Information is 1.86 times less risky than Capgemini. It trades about 0.06 of its potential returns per unit of risk. Capgemini SE ADR is currently generating about -0.19 per unit of risk. If you would invest  8,204  in Fidelity National Information on September 4, 2024 and sell it today you would earn a total of  309.00  from holding Fidelity National Information or generate 3.77% return on investment over 90 days.

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

Fidelity National Information  vs.  Capgemini SE ADR

Fidelity National

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity National Information are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward indicators, Fidelity National is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Capgemini SE ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capgemini SE ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Fidelity National and Capgemini

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

The idea behind Fidelity National Information and Capgemini SE ADR 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.