Correlation Between Fidelity National and CGI

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

Diversification Opportunities for Fidelity National and CGI

-0.45

Correlation Coefficient

Fidelity National  CGI

Very good diversification

The 3 months correlation between Fidelity and CGI is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity National Information and CGI Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CGI Inc 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 CGI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CGI Inc has no effect on the direction of Fidelity National i.e., Fidelity National and CGI go up and down completely randomly.

Pair Corralation between Fidelity National and CGI

Considering the 90-day investment horizon Fidelity National Information is expected to generate 1.45 times more return on investment than CGI. However, Fidelity National is 1.45 times more volatile than CGI Inc. It trades about 0.15 of its potential returns per unit of risk. CGI Inc is currently generating about -0.07 per unit of risk. If you would invest  7,095  in Fidelity National Information on February 12, 2024 and sell it today you would earn a total of  369.00  from holding Fidelity National Information or generate 5.2% return on investment over 90 days.

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

Fidelity National Information  vs.  CGI Inc

Fidelity National

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity National Information are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward indicators, Fidelity National unveiled solid returns over the last few months and may actually be approaching a breakup point.

CGI Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CGI Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Fidelity National and CGI

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

The idea behind Fidelity National Information and CGI Inc 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.