Correlation Between Fairfax Financial and Palomar Holdings
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Palomar Holdings 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 Palomar Holdings 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 Palomar Holdings, you can compare the effects of market volatilities on Fairfax Financial and Palomar Holdings 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 Palomar Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Palomar Holdings.
Diversification Opportunities for Fairfax Financial and Palomar Holdings
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fairfax and Palomar is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Palomar Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palomar Holdings 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 Palomar Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palomar Holdings has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Palomar Holdings go up and down completely randomly.
Pair Corralation between Fairfax Financial and Palomar Holdings
If you would invest 10,438 in Palomar Holdings on November 2, 2024 and sell it today you would earn a total of 306.00 from holding Palomar Holdings or generate 2.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 5.26% |
| Values | Daily Returns |
Fairfax Financial Holdings vs. Palomar Holdings
Performance |
| Timeline |
| Fairfax Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Palomar Holdings |
Fairfax Financial and Palomar Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Palomar Holdings
The main advantage of trading using opposite Fairfax Financial and Palomar Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Palomar Holdings 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 Palomar Holdings will offset losses from the drop in Palomar Holdings' long position.| Fairfax Financial vs. RLI Corp | Fairfax Financial vs. Chubb | Fairfax Financial vs. Progressive Corp | Fairfax Financial vs. White Mountains Insurance |
| Palomar Holdings vs. Horace Mann Educators | Palomar Holdings vs. Kemper | Palomar Holdings vs. RLI Corp | Palomar Holdings 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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