Correlation Between Redwood Real and The Fairholme
Can any of the company-specific risk be diversified away by investing in both Redwood Real and The Fairholme 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 Redwood Real and The Fairholme into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Redwood Real Estate and The Fairholme Focused, you can compare the effects of market volatilities on Redwood Real and The Fairholme 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 Redwood Real with a short position of The Fairholme. Check out your portfolio center. Please also check ongoing floating volatility patterns of Redwood Real and The Fairholme.
Diversification Opportunities for Redwood Real and The Fairholme
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Redwood and The is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Redwood Real Estate and The Fairholme Focused in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairholme Focused and Redwood Real 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 Redwood Real Estate are associated (or correlated) with The Fairholme. 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 Redwood Real i.e., Redwood Real and The Fairholme go up and down completely randomly.
Pair Corralation between Redwood Real and The Fairholme
Assuming the 90 days horizon Redwood Real is expected to generate 1.89 times less return on investment than The Fairholme. But when comparing it to its historical volatility, Redwood Real Estate is 7.73 times less risky than The Fairholme. It trades about 0.47 of its potential returns per unit of risk. The Fairholme Focused is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,116 in The Fairholme Focused on October 11, 2024 and sell it today you would earn a total of 273.00 from holding The Fairholme Focused or generate 24.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 78.59% |
| Values | Daily Returns |
Redwood Real Estate vs. The Fairholme Focused
Performance |
| Timeline |
| Redwood Real Estate |
| Fairholme Focused |
Redwood Real and The Fairholme Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Redwood Real and The Fairholme
The main advantage of trading using opposite Redwood Real and The Fairholme positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Redwood Real position performs unexpectedly, The Fairholme 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 The Fairholme will offset losses from the drop in The Fairholme's long position.| Redwood Real vs. International Investors Gold | Redwood Real vs. Precious Metals And | Redwood Real vs. Sprott Gold Equity | Redwood Real vs. Goldman Sachs Short |
| The Fairholme vs. Tiaa Cref Real Estate | The Fairholme vs. Nexpoint Real Estate | The Fairholme vs. Columbia Real Estate | The Fairholme vs. Redwood Real Estate |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |