Correlation Between Equity Growth and Fairholme Focused
Can any of the company-specific risk be diversified away by investing in both Equity Growth and Fairholme Focused 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 Equity Growth and Fairholme Focused into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equity Growth Fund and The Fairholme Focused, you can compare the effects of market volatilities on Equity Growth and Fairholme Focused 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 Equity Growth with a short position of Fairholme Focused. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equity Growth and Fairholme Focused.
Diversification Opportunities for Equity Growth and Fairholme Focused
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Equity and Fairholme is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Equity Growth Fund and The Fairholme Focused in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairholme Focused and Equity Growth 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 Equity Growth Fund are associated (or correlated) with Fairholme Focused. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fairholme Focused has no effect on the direction of Equity Growth i.e., Equity Growth and Fairholme Focused go up and down completely randomly.
Pair Corralation between Equity Growth and Fairholme Focused
Assuming the 90 days horizon Equity Growth Fund is expected to generate 2.13 times more return on investment than Fairholme Focused. However, Equity Growth is 2.13 times more volatile than The Fairholme Focused. It trades about 0.15 of its potential returns per unit of risk. The Fairholme Focused is currently generating about 0.17 per unit of risk. If you would invest 2,564 in Equity Growth Fund on September 14, 2024 and sell it today you would earn a total of 911.00 from holding Equity Growth Fund or generate 35.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.63% |
| Values | Daily Returns |
Equity Growth Fund vs. The Fairholme Focused
Performance |
| Timeline |
| Equity Growth |
| Fairholme Focused |
Equity Growth and Fairholme Focused Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equity Growth and Fairholme Focused
The main advantage of trading using opposite Equity Growth and Fairholme Focused positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equity Growth position performs unexpectedly, Fairholme Focused 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 Fairholme Focused will offset losses from the drop in Fairholme Focused's long position.| Equity Growth vs. Mid Cap Value | Equity Growth vs. Income Growth Fund | Equity Growth vs. Diversified Bond Fund | Equity Growth vs. Emerging Markets Fund |
| Fairholme Focused vs. The Fairholme Fund | Fairholme Focused vs. Fidelity Magellan Fund | Fairholme Focused vs. Fidelity Telecom And | Fairholme Focused vs. Equity Growth Fund |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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