Correlation Between Fairfax Financial and TUT Fitness
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and TUT Fitness 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 TUT Fitness 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 TUT Fitness Group, you can compare the effects of market volatilities on Fairfax Financial and TUT Fitness 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 TUT Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and TUT Fitness.
Diversification Opportunities for Fairfax Financial and TUT Fitness
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fairfax and TUT is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and TUT Fitness Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TUT Fitness Group 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 TUT Fitness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TUT Fitness Group has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and TUT Fitness go up and down completely randomly.
Pair Corralation between Fairfax Financial and TUT Fitness
Assuming the 90 days trading horizon Fairfax Financial is expected to generate 8.88 times less return on investment than TUT Fitness. But when comparing it to its historical volatility, Fairfax Financial Holdings is 29.99 times less risky than TUT Fitness. It trades about 0.14 of its potential returns per unit of risk. TUT Fitness Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 25.00 in TUT Fitness Group on August 26, 2024 and sell it today you would lose (17.00) from holding TUT Fitness Group or give up 68.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fairfax Financial Holdings vs. TUT Fitness Group
Performance |
| Timeline |
| Fairfax Financial |
| TUT Fitness Group |
Fairfax Financial and TUT Fitness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and TUT Fitness
The main advantage of trading using opposite Fairfax Financial and TUT Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, TUT Fitness 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 TUT Fitness will offset losses from the drop in TUT Fitness' long position.| Fairfax Financial vs. Fairfax Financial Holdings | Fairfax Financial vs. Fairfax Financial Holdings | Fairfax Financial vs. Fairfax Financial Holdings | Fairfax Financial vs. Fairfax Financial Holdings |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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