Correlation Between Fairfax Financial and HCI
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and HCI 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 HCI 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 HCI Group, you can compare the effects of market volatilities on Fairfax Financial and HCI 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 HCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and HCI.
Diversification Opportunities for Fairfax Financial and HCI
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fairfax and HCI is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and HCI Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCI Group 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 HCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCI Group has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and HCI go up and down completely randomly.
Pair Corralation between Fairfax Financial and HCI
If you would invest 76,650 in Fairfax Financial Holdings on August 29, 2024 and sell it today you would earn a total of 0.00 from holding Fairfax Financial Holdings or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.55% |
| Values | Daily Returns |
Fairfax Financial Holdings vs. HCI Group
Performance |
| Timeline |
| Fairfax Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| HCI Group |
Fairfax Financial and HCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and HCI
The main advantage of trading using opposite Fairfax Financial and HCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, HCI 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 HCI will offset losses from the drop in HCI's long position.| Fairfax Financial vs. RLI Corp | Fairfax Financial vs. Chubb | Fairfax Financial vs. Progressive Corp | Fairfax Financial vs. White Mountains Insurance |
| HCI vs. Universal Insurance Holdings | HCI vs. Kingstone Companies | HCI vs. Horace Mann Educators | HCI vs. Heritage Insurance Hldgs |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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