Correlation Between Fiserv and Infosys

Can any of the company-specific risk be diversified away by investing in both Fiserv and Infosys 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 Fiserv and Infosys into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fiserv Inc and Infosys Ltd ADR, you can compare the effects of market volatilities on Fiserv and Infosys 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 Fiserv with a short position of Infosys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fiserv and Infosys.

Diversification Opportunities for Fiserv and Infosys

-0.62

Correlation Coefficient

Fiserv  Infosys

Excellent diversification

The 3 months correlation between Fiserv and Infosys is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Fiserv Inc and Infosys Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infosys Ltd ADR and Fiserv 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 Fiserv Inc are associated (or correlated) with Infosys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infosys Ltd ADR has no effect on the direction of Fiserv i.e., Fiserv and Infosys go up and down completely randomly.

Pair Corralation between Fiserv and Infosys

Allowing for the 90-day total investment horizon Fiserv Inc is expected to generate 0.69 times more return on investment than Infosys. However, Fiserv Inc is 1.45 times less risky than Infosys. It trades about 0.21 of its potential returns per unit of risk. Infosys Ltd ADR is currently generating about 0.01 per unit of risk. If you would invest  11,954  in Fiserv Inc on February 1, 2024 and sell it today you would earn a total of  3,313  from holding Fiserv Inc or generate 27.71% return on investment over 90 days.

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

Fiserv Inc  vs.  Infosys Ltd ADR

Fiserv Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fiserv Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile forward indicators, Fiserv may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Infosys Ltd ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Infosys Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Fiserv and Infosys

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

The idea behind Fiserv Inc and Infosys Ltd 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.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.