Correlation Between Fairfax Financial and Else Nutrition
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Else Nutrition 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 Else Nutrition 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 Else Nutrition Holdings, you can compare the effects of market volatilities on Fairfax Financial and Else Nutrition 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 Else Nutrition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Else Nutrition.
Diversification Opportunities for Fairfax Financial and Else Nutrition
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fairfax and Else is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Else Nutrition Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Else Nutrition Holdings 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 Else Nutrition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Else Nutrition Holdings has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Else Nutrition go up and down completely randomly.
Pair Corralation between Fairfax Financial and Else Nutrition
Assuming the 90 days trading horizon Fairfax Financial Holdings is expected to generate 0.05 times more return on investment than Else Nutrition. However, Fairfax Financial Holdings is 19.14 times less risky than Else Nutrition. It trades about 0.24 of its potential returns per unit of risk. Else Nutrition Holdings is currently generating about -0.31 per unit of risk. If you would invest 2,450 in Fairfax Financial Holdings on September 4, 2024 and sell it today you would earn a total of 51.00 from holding Fairfax Financial Holdings or generate 2.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Fairfax Financial Holdings vs. Else Nutrition Holdings
Performance |
| Timeline |
| Fairfax Financial |
| Else Nutrition Holdings |
Fairfax Financial and Else Nutrition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Else Nutrition
The main advantage of trading using opposite Fairfax Financial and Else Nutrition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Else Nutrition 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 Else Nutrition will offset losses from the drop in Else Nutrition's long position.| Fairfax Financial vs. Apple Inc CDR | Fairfax Financial vs. Microsoft Corp CDR | Fairfax Financial vs. Amazon CDR | Fairfax Financial vs. Alphabet Inc CDR |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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