Correlation Between The Fairholme and Sprucegrove International
Can any of the company-specific risk be diversified away by investing in both The Fairholme and Sprucegrove International 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 Sprucegrove International 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 Sprucegrove International Equity, you can compare the effects of market volatilities on The Fairholme and Sprucegrove International 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 Sprucegrove International. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Fairholme and Sprucegrove International.
Diversification Opportunities for The Fairholme and Sprucegrove International
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between THE and Sprucegrove is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding The Fairholme Focused and Sprucegrove International Equi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprucegrove International 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 Sprucegrove International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprucegrove International has no effect on the direction of The Fairholme i.e., The Fairholme and Sprucegrove International go up and down completely randomly.
Pair Corralation between The Fairholme and Sprucegrove International
Assuming the 90 days horizon The Fairholme Focused is expected to generate 0.53 times more return on investment than Sprucegrove International. However, The Fairholme Focused is 1.89 times less risky than Sprucegrove International. It trades about 0.15 of its potential returns per unit of risk. Sprucegrove International Equity is currently generating about -0.09 per unit of risk. If you would invest 1,305 in The Fairholme Focused on October 25, 2024 and sell it today you would earn a total of 130.00 from holding The Fairholme Focused or generate 9.96% 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. Sprucegrove International Equi
Performance |
| Timeline |
| Fairholme Focused |
| Sprucegrove International |
The Fairholme and Sprucegrove International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The Fairholme and Sprucegrove International
The main advantage of trading using opposite The Fairholme and Sprucegrove International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Fairholme position performs unexpectedly, Sprucegrove International 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 Sprucegrove International will offset losses from the drop in Sprucegrove International's long position.| The Fairholme vs. Hennessy Large Cap | The Fairholme vs. Davis Financial Fund | The Fairholme vs. Davis Financial Fund | The Fairholme vs. John Hancock Financial |
| Sprucegrove International vs. Enhanced Large Pany | Sprucegrove International vs. Dodge Cox Stock | Sprucegrove International vs. Qs Large Cap | Sprucegrove International vs. Rational Strategic Allocation |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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