Correlation Between Fairfax Financial and CNA Financial
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and CNA Financial 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 CNA Financial 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 CNA Financial, you can compare the effects of market volatilities on Fairfax Financial and CNA Financial 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 CNA Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and CNA Financial.
Diversification Opportunities for Fairfax Financial and CNA Financial
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fairfax and CNA is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and CNA Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNA Financial 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 CNA Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNA Financial has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and CNA Financial go up and down completely randomly.
Pair Corralation between Fairfax Financial and CNA Financial
If you would invest 4,804 in CNA Financial on August 30, 2024 and sell it today you would earn a total of 223.00 from holding CNA Financial or generate 4.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.35% |
| Values | Daily Returns |
Fairfax Financial Holdings vs. CNA Financial
Performance |
| Timeline |
| Fairfax Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| CNA Financial |
Fairfax Financial and CNA Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and CNA Financial
The main advantage of trading using opposite Fairfax Financial and CNA Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, CNA Financial 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 CNA Financial will offset losses from the drop in CNA Financial's long position.| Fairfax Financial vs. RLI Corp | Fairfax Financial vs. Chubb | Fairfax Financial vs. Progressive Corp | Fairfax Financial vs. White Mountains Insurance |
| CNA Financial vs. Selective Insurance Group | CNA Financial vs. Kemper | CNA Financial vs. Donegal Group B | CNA Financial vs. Argo Group International |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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