Correlation Between Fidelity National and AMERISAFE

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

Diversification Opportunities for Fidelity National and AMERISAFE

0.71

Correlation Coefficient

Fidelity National  AMERISAFE

Poor diversification

The 3 months correlation between Fidelity and AMERISAFE is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity National Financial and AMERISAFE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMERISAFE 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 AMERISAFE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMERISAFE has no effect on the direction of Fidelity National i.e., Fidelity National and AMERISAFE go up and down completely randomly.

Pair Corralation between Fidelity National and AMERISAFE

Considering the 90-day investment horizon Fidelity National Financial is expected to generate 1.42 times more return on investment than AMERISAFE. However, Fidelity National is 1.42 times more volatile than AMERISAFE. It trades about 0.06 of its potential returns per unit of risk. AMERISAFE is currently generating about -0.04 per unit of risk. If you would invest  5,894  in Fidelity National Financial on January 27, 2025 and sell it today you would earn a total of  371.00  from holding Fidelity National Financial or generate 6.29% return on investment over 90 days.

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

Fidelity National Financial  vs.  AMERISAFE

Fidelity National

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity National Financial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Fidelity National may actually be approaching a critical reversion point that can send shares even higher in May 2025.

AMERISAFE

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Fidelity National and AMERISAFE

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

The idea behind Fidelity National Financial and AMERISAFE 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 the Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.