Correlation Between Fastly and White Mountains
Can any of the company-specific risk be diversified away by investing in both Fastly and White Mountains 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 Fastly and White Mountains into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fastly Inc and White Mountains Insurance, you can compare the effects of market volatilities on Fastly and White Mountains 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 Fastly with a short position of White Mountains. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fastly and White Mountains.
Diversification Opportunities for Fastly and White Mountains
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Fastly and White is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Fastly Inc and White Mountains Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on White Mountains Insurance and Fastly 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 Fastly Inc are associated (or correlated) with White Mountains. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of White Mountains Insurance has no effect on the direction of Fastly i.e., Fastly and White Mountains go up and down completely randomly.
Pair Corralation between Fastly and White Mountains
Given the investment horizon of 90 days Fastly is expected to generate 1.32 times less return on investment than White Mountains. In addition to that, Fastly is 3.06 times more volatile than White Mountains Insurance. It trades about 0.02 of its total potential returns per unit of risk. White Mountains Insurance is currently generating about 0.06 per unit of volatility. If you would invest 132,983 in White Mountains Insurance on August 26, 2024 and sell it today you would earn a total of 65,851 from holding White Mountains Insurance or generate 49.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fastly Inc vs. White Mountains Insurance
Performance |
| Timeline |
| Fastly Inc |
| White Mountains Insurance |
Fastly and White Mountains Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fastly and White Mountains
The main advantage of trading using opposite Fastly and White Mountains positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fastly position performs unexpectedly, White Mountains 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 White Mountains will offset losses from the drop in White Mountains' long position.The idea behind Fastly Inc and White Mountains Insurance pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| White Mountains vs. Fiverr International | White Mountains vs. Pinterest | White Mountains vs. Upstart Holdings | White Mountains vs. Fastly Inc |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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