Correlation Between Fidelity National and Positive Physicians

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Can any of the company-specific risk be diversified away by investing in both Fidelity National and Positive Physicians 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 Positive Physicians into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity National Financial and Positive Physicians Holdings, you can compare the effects of market volatilities on Fidelity National and Positive Physicians 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 Positive Physicians. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity National and Positive Physicians.

Diversification Opportunities for Fidelity National and Positive Physicians

0.47
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Fidelity and Positive is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity National Financial and Positive Physicians Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Positive Physicians 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 Financial are associated (or correlated) with Positive Physicians. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Positive Physicians has no effect on the direction of Fidelity National i.e., Fidelity National and Positive Physicians go up and down completely randomly.

Pair Corralation between Fidelity National and Positive Physicians

Considering the 90-day investment horizon Fidelity National is expected to generate 4.18 times less return on investment than Positive Physicians. But when comparing it to its historical volatility, Fidelity National Financial is 5.04 times less risky than Positive Physicians. It trades about 0.04 of its potential returns per unit of risk. Positive Physicians Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,015  in Positive Physicians Holdings on May 18, 2022 and sell it today you would lose (140.00)  from holding Positive Physicians Holdings or give up 13.79% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy99.8%
ValuesDaily Returns

Fidelity National Financial  vs.  Positive Physicians Holdings

 Performance (%) 
       Timeline  
Fidelity National 
Fidelity Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity National Financial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Fidelity National is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Fidelity Price Channel

Positive Physicians 
Positive Performance
0 of 100
Over the last 90 days Positive Physicians Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, Positive Physicians is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Positive Price Channel

Fidelity National and Positive Physicians Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fidelity National and Positive Physicians

The main advantage of trading using opposite Fidelity National and Positive Physicians positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity National position performs unexpectedly, Positive Physicians 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 Positive Physicians will offset losses from the drop in Positive Physicians' long position.
The idea behind Fidelity National Financial and Positive Physicians Holdings 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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