Correlation Between Fairfax Financial and Senvest Capital
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Senvest Capital 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 Fairfax Financial and Senvest Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fairfax Financial Holdings and Senvest Capital, you can compare the effects of market volatilities on Fairfax Financial and Senvest Capital 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 Fairfax Financial with a short position of Senvest Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Senvest Capital.
Diversification Opportunities for Fairfax Financial and Senvest Capital
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fairfax and Senvest is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Senvest Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senvest Capital and Fairfax Financial 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 Fairfax Financial Holdings are associated (or correlated) with Senvest Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senvest Capital has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Senvest Capital go up and down completely randomly.
Pair Corralation between Fairfax Financial and Senvest Capital
Assuming the 90 days trading horizon Fairfax Financial is expected to generate 1.18 times less return on investment than Senvest Capital. But when comparing it to its historical volatility, Fairfax Financial Holdings is 2.03 times less risky than Senvest Capital. It trades about 0.23 of its potential returns per unit of risk. Senvest Capital is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 37,500 in Senvest Capital on November 2, 2024 and sell it today you would earn a total of 1,450 from holding Senvest Capital or generate 3.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fairfax Financial Holdings vs. Senvest Capital
Performance |
| Timeline |
| Fairfax Financial |
| Senvest Capital |
Fairfax Financial and Senvest Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Senvest Capital
The main advantage of trading using opposite Fairfax Financial and Senvest Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Senvest Capital 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 Senvest Capital will offset losses from the drop in Senvest Capital's long position.| Fairfax Financial vs. Canadian Utilities Limited | Fairfax Financial vs. Magna Mining | Fairfax Financial vs. SalesforceCom CDR | Fairfax Financial vs. Black Mammoth Metals |
| Senvest Capital vs. Air Canada | Senvest Capital vs. SalesforceCom CDR | Senvest Capital vs. Caribbean Utilities | Senvest Capital vs. Brookfield Asset Management |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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