Correlation Between Fairfax Financial and Kemper
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Kemper 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 Kemper 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 Kemper, you can compare the effects of market volatilities on Fairfax Financial and Kemper 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 Kemper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Kemper.
Diversification Opportunities for Fairfax Financial and Kemper
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fairfax and Kemper is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Kemper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kemper 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 Kemper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kemper has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Kemper go up and down completely randomly.
Pair Corralation between Fairfax Financial and Kemper
If you would invest 6,235 in Kemper on September 5, 2024 and sell it today you would earn a total of 794.00 from holding Kemper or generate 12.73% 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. Kemper
Performance |
| Timeline |
| Fairfax Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Kemper |
Fairfax Financial and Kemper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Kemper
The main advantage of trading using opposite Fairfax Financial and Kemper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Kemper 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 Kemper will offset losses from the drop in Kemper's long position.| Fairfax Financial vs. RLI Corp | Fairfax Financial vs. Chubb | Fairfax Financial vs. Progressive Corp | Fairfax Financial vs. White Mountains Insurance |
| Kemper vs. Selective Insurance Group | Kemper vs. Donegal Group B | Kemper vs. Argo Group International | Kemper vs. Global Indemnity PLC |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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