Correlation Between Fairfax Financial and Stewart Information
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Stewart Information 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 Stewart Information 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 Stewart Information Services, you can compare the effects of market volatilities on Fairfax Financial and Stewart Information 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 Stewart Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Stewart Information.
Diversification Opportunities for Fairfax Financial and Stewart Information
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Fairfax and Stewart is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Stewart Information Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stewart Information 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 Stewart Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stewart Information has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Stewart Information go up and down completely randomly.
Pair Corralation between Fairfax Financial and Stewart Information
Assuming the 90 days horizon Fairfax Financial Holdings is expected to generate 0.81 times more return on investment than Stewart Information. However, Fairfax Financial Holdings is 1.23 times less risky than Stewart Information. It trades about 0.11 of its potential returns per unit of risk. Stewart Information Services is currently generating about 0.06 per unit of risk. If you would invest 58,821 in Fairfax Financial Holdings on November 6, 2024 and sell it today you would earn a total of 70,579 from holding Fairfax Financial Holdings or generate 119.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fairfax Financial Holdings vs. Stewart Information Services
Performance |
| Timeline |
| Fairfax Financial |
| Stewart Information |
Fairfax Financial and Stewart Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Stewart Information
The main advantage of trading using opposite Fairfax Financial and Stewart Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Stewart Information 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 Stewart Information will offset losses from the drop in Stewart Information's long position.| Fairfax Financial vs. Wenzhou Kangning Hospital | Fairfax Financial vs. RCI Hospitality Holdings | Fairfax Financial vs. Cardinal Health | Fairfax Financial vs. US Physical Therapy |
| Stewart Information vs. Verizon Communications | Stewart Information vs. Mobilezone Holding AG | Stewart Information vs. Ribbon Communications | Stewart Information vs. Entravision Communications |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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