Correlation Between Fairfax Financial and Donegal Group
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Donegal Group 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 Donegal Group 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 Donegal Group B, you can compare the effects of market volatilities on Fairfax Financial and Donegal Group 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 Donegal Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Donegal Group.
Diversification Opportunities for Fairfax Financial and Donegal Group
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fairfax and Donegal is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Donegal Group B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Donegal Group B 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 Donegal Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Donegal Group B has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Donegal Group go up and down completely randomly.
Pair Corralation between Fairfax Financial and Donegal Group
If you would invest 1,459 in Donegal Group B on August 31, 2024 and sell it today you would lose (9.00) from holding Donegal Group B or give up 0.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 5.56% |
| Values | Daily Returns |
Fairfax Financial Holdings vs. Donegal Group B
Performance |
| Timeline |
| Fairfax Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Donegal Group B |
Fairfax Financial and Donegal Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Donegal Group
The main advantage of trading using opposite Fairfax Financial and Donegal Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Donegal Group 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 Donegal Group will offset losses from the drop in Donegal Group's long position.| Fairfax Financial vs. RLI Corp | Fairfax Financial vs. Chubb | Fairfax Financial vs. Progressive Corp | Fairfax Financial vs. White Mountains Insurance |
| Donegal Group vs. Progressive Corp | Donegal Group vs. Chubb | Donegal Group vs. The Allstate | Donegal Group vs. CNA Financial |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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