Correlation Between Fairholme Focused and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Fairholme Focused and Dow Jones 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 Fairholme Focused and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Fairholme Focused and Dow Jones Industrial, you can compare the effects of market volatilities on Fairholme Focused and Dow Jones 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 Fairholme Focused with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairholme Focused and Dow Jones.
Diversification Opportunities for Fairholme Focused and Dow Jones
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fairholme and Dow is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding The Fairholme Focused and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Fairholme Focused 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 The Fairholme Focused are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Fairholme Focused i.e., Fairholme Focused and Dow Jones go up and down completely randomly.
Pair Corralation between Fairholme Focused and Dow Jones
Assuming the 90 days horizon The Fairholme Focused is expected to generate 0.85 times more return on investment than Dow Jones. However, The Fairholme Focused is 1.17 times less risky than Dow Jones. It trades about 0.23 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.0 per unit of risk. If you would invest 1,376 in The Fairholme Focused on September 13, 2024 and sell it today you would earn a total of 32.00 from holding The Fairholme Focused or generate 2.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Fairholme Focused vs. Dow Jones Industrial
Performance |
| Timeline |
Fairholme Focused and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
The Fairholme Focused
Pair trading matchups for Fairholme Focused
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Fairholme Focused and Dow Jones
The main advantage of trading using opposite Fairholme Focused and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairholme Focused position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Fairholme Focused vs. The Fairholme Fund | Fairholme Focused vs. Fidelity Magellan Fund | Fairholme Focused vs. Fidelity Telecom And | Fairholme Focused vs. Equity Growth Fund |
| Dow Jones vs. Hurco Companies | Dow Jones vs. Tyson Foods | Dow Jones vs. MYR Group | Dow Jones vs. Cannae Holdings |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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