Correlation Between The Fairholme and Seafarer Overseas
Can any of the company-specific risk be diversified away by investing in both The Fairholme and Seafarer Overseas 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 The Fairholme and Seafarer Overseas 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 Seafarer Overseas Growth, you can compare the effects of market volatilities on The Fairholme and Seafarer Overseas 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 The Fairholme with a short position of Seafarer Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Fairholme and Seafarer Overseas.
Diversification Opportunities for The Fairholme and Seafarer Overseas
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between The and Seafarer is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding The Fairholme Focused and Seafarer Overseas Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seafarer Overseas Growth and The Fairholme 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 Seafarer Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seafarer Overseas Growth has no effect on the direction of The Fairholme i.e., The Fairholme and Seafarer Overseas go up and down completely randomly.
Pair Corralation between The Fairholme and Seafarer Overseas
Assuming the 90 days horizon The Fairholme Focused is expected to generate 0.56 times more return on investment than Seafarer Overseas. However, The Fairholme Focused is 1.77 times less risky than Seafarer Overseas. It trades about 0.11 of its potential returns per unit of risk. Seafarer Overseas Growth is currently generating about 0.01 per unit of risk. If you would invest 1,114 in The Fairholme Focused on October 10, 2024 and sell it today you would earn a total of 268.00 from holding The Fairholme Focused or generate 24.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Fairholme Focused vs. Seafarer Overseas Growth
Performance |
| Timeline |
| Fairholme Focused |
| Seafarer Overseas Growth |
The Fairholme and Seafarer Overseas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The Fairholme and Seafarer Overseas
The main advantage of trading using opposite The Fairholme and Seafarer Overseas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Fairholme position performs unexpectedly, Seafarer Overseas 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 Seafarer Overseas will offset losses from the drop in Seafarer Overseas' long position.| The Fairholme vs. Transamerica Intermediate Muni | The Fairholme vs. Oklahoma Municipal Fund | The Fairholme vs. Baird Quality Intermediate | The Fairholme vs. Pioneer Amt Free Municipal |
| Seafarer Overseas vs. Moderately Aggressive Balanced | Seafarer Overseas vs. Qs Moderate Growth | Seafarer Overseas vs. Tiaa Cref Lifestyle Moderate | Seafarer Overseas vs. Qs Moderate Growth |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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