Correlation Between Fairfax Financial and Entourage Health
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Entourage Health 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 Entourage Health 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 Entourage Health Corp, you can compare the effects of market volatilities on Fairfax Financial and Entourage Health 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 Entourage Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Entourage Health.
Diversification Opportunities for Fairfax Financial and Entourage Health
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fairfax and Entourage is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Entourage Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entourage Health Corp 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 Entourage Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entourage Health Corp has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Entourage Health go up and down completely randomly.
Pair Corralation between Fairfax Financial and Entourage Health
Assuming the 90 days trading horizon Fairfax Financial is expected to generate 47.24 times less return on investment than Entourage Health. But when comparing it to its historical volatility, Fairfax Financial Holdings is 75.04 times less risky than Entourage Health. It trades about 0.39 of its potential returns per unit of risk. Entourage Health Corp is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 0.50 in Entourage Health Corp on September 13, 2024 and sell it today you would earn a total of 0.50 from holding Entourage Health Corp or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fairfax Financial Holdings vs. Entourage Health Corp
Performance |
| Timeline |
| Fairfax Financial |
| Entourage Health Corp |
Fairfax Financial and Entourage Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Entourage Health
The main advantage of trading using opposite Fairfax Financial and Entourage Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Entourage Health 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 Entourage Health will offset losses from the drop in Entourage Health's long position.| Fairfax Financial vs. Intact Financial | Fairfax Financial vs. iA Financial | Fairfax Financial vs. TMX Group Limited | Fairfax Financial vs. Onex Corp |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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