Correlation Between Fidelity National and Telecomunicaes Brasileiras

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

Diversification Opportunities for Fidelity National and Telecomunicaes Brasileiras

-0.2

Correlation Coefficient

Fidelity National  Telecomunicaes Brasileiras

Good diversification

The 3 months correlation between Fidelity and Telecomunicaes is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity National Information and Telecomunicaes Brasileiras SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telecomunicaes Brasileiras 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 Telecomunicaes Brasileiras. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telecomunicaes Brasileiras has no effect on the direction of Fidelity National i.e., Fidelity National and Telecomunicaes Brasileiras go up and down completely randomly.

Pair Corralation between Fidelity National and Telecomunicaes Brasileiras

Assuming the 90 days trading horizon Fidelity National Information is expected to generate 0.43 times more return on investment than Telecomunicaes Brasileiras. However, Fidelity National Information is 2.3 times less risky than Telecomunicaes Brasileiras. It trades about 0.12 of its potential returns per unit of risk. Telecomunicaes Brasileiras SA is currently generating about -0.1 per unit of risk. If you would invest  2,589  in Fidelity National Information on May 7, 2025 and sell it today you would earn a total of  192.00  from holding Fidelity National Information or generate 7.42% return on investment over 90 days.

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

Fidelity National Information  vs.  Telecomunicaes Brasileiras SA

Fidelity National

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity National Information are ranked lower than 9 (%) 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 September 2025.

Telecomunicaes Brasileiras

Risk-Adjusted Performance

Very Weak

Over the last 90 days Telecomunicaes Brasileiras SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Preferred Stock's basic indicators remain comparatively stable which may send shares a bit higher in September 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Fidelity National and Telecomunicaes Brasileiras

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

The idea behind Fidelity National Information and Telecomunicaes Brasileiras SA 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.