Correlation Between Fairfax Financial and WR Berkley
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and WR Berkley 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 WR Berkley 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 WR Berkley, you can compare the effects of market volatilities on Fairfax Financial and WR Berkley 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 WR Berkley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and WR Berkley.
Diversification Opportunities for Fairfax Financial and WR Berkley
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fairfax and WRB-PH is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and WR Berkley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WR Berkley 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 WR Berkley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WR Berkley has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and WR Berkley go up and down completely randomly.
Pair Corralation between Fairfax Financial and WR Berkley
If you would invest 1,771 in WR Berkley on November 9, 2024 and sell it today you would lose (1.00) from holding WR Berkley or give up 0.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Fairfax Financial Holdings vs. WR Berkley
Performance |
| Timeline |
| Fairfax Financial |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| WR Berkley |
Fairfax Financial and WR Berkley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and WR Berkley
The main advantage of trading using opposite Fairfax Financial and WR Berkley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, WR Berkley 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 WR Berkley will offset losses from the drop in WR Berkley's long position.| Fairfax Financial vs. RLI Corp | Fairfax Financial vs. Chubb | Fairfax Financial vs. Progressive Corp | Fairfax Financial vs. White Mountains Insurance |
| WR Berkley vs. WR Berkley | WR Berkley vs. WR Berkley | WR Berkley vs. Southern Company Series | WR Berkley vs. DTE Energy |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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