Correlation Between Fairholme Fund and Third Avenue
Can any of the company-specific risk be diversified away by investing in both Fairholme Fund and Third Avenue 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 Fairholme Fund and Third Avenue into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Fairholme Fund and Third Avenue Real, you can compare the effects of market volatilities on Fairholme Fund and Third Avenue 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 Fairholme Fund with a short position of Third Avenue. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairholme Fund and Third Avenue.
Diversification Opportunities for Fairholme Fund and Third Avenue
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fairholme and Third is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding The Fairholme Fund and Third Avenue Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Third Avenue Real and Fairholme Fund 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 The Fairholme Fund are associated (or correlated) with Third Avenue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Third Avenue Real has no effect on the direction of Fairholme Fund i.e., Fairholme Fund and Third Avenue go up and down completely randomly.
Pair Corralation between Fairholme Fund and Third Avenue
Assuming the 90 days horizon The Fairholme Fund is expected to under-perform the Third Avenue. But the mutual fund apears to be less risky and, when comparing its historical volatility, The Fairholme Fund is 2.14 times less risky than Third Avenue. The mutual fund trades about -0.31 of its potential returns per unit of risk. The Third Avenue Real is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 2,528 in Third Avenue Real on September 14, 2024 and sell it today you would lose (116.00) from holding Third Avenue Real or give up 4.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Fairholme Fund vs. Third Avenue Real
Performance |
| Timeline |
| Fairholme Fund |
| Third Avenue Real |
Fairholme Fund and Third Avenue Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairholme Fund and Third Avenue
The main advantage of trading using opposite Fairholme Fund and Third Avenue positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairholme Fund position performs unexpectedly, Third Avenue 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 Third Avenue will offset losses from the drop in Third Avenue's long position.| Fairholme Fund vs. Ab Small Cap | Fairholme Fund vs. Small Pany Growth | Fairholme Fund vs. Kinetics Small Cap | Fairholme Fund vs. Df Dent Small |
| Third Avenue vs. Third Avenue Value | Third Avenue vs. Third Avenue Small Cap | Third Avenue vs. Alpine Realty Income | Third Avenue vs. The Fairholme 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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