Correlation Between DAX Index and Fairfax Financial
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By analyzing existing cross correlation between DAX Index and Fairfax Financial Holdings, you can compare the effects of market volatilities on DAX Index and Fairfax Financial 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 DAX Index with a short position of Fairfax Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and Fairfax Financial.
Diversification Opportunities for DAX Index and Fairfax Financial
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DAX and Fairfax is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and Fairfax Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairfax Financial and DAX Index 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 DAX Index are associated (or correlated) with Fairfax Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fairfax Financial has no effect on the direction of DAX Index i.e., DAX Index and Fairfax Financial go up and down completely randomly.
Pair Corralation between DAX Index and Fairfax Financial
Assuming the 90 days trading horizon DAX Index is expected to under-perform the Fairfax Financial. But the index apears to be less risky and, when comparing its historical volatility, DAX Index is 2.63 times less risky than Fairfax Financial. The index trades about -0.03 of its potential returns per unit of risk. The Fairfax Financial Holdings is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 116,800 in Fairfax Financial Holdings on August 28, 2024 and sell it today you would earn a total of 18,000 from holding Fairfax Financial Holdings or generate 15.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
DAX Index vs. Fairfax Financial Holdings
Performance |
| Timeline |
DAX Index and Fairfax Financial Volatility Contrast
Predicted Return Density |
| Returns |
DAX Index
Pair trading matchups for DAX Index
Fairfax Financial Holdings
Pair trading matchups for Fairfax Financial
Pair Trading with DAX Index and Fairfax Financial
The main advantage of trading using opposite DAX Index and Fairfax Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index position performs unexpectedly, Fairfax Financial 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 Fairfax Financial will offset losses from the drop in Fairfax Financial's long position.| DAX Index vs. ELMOS SEMICONDUCTOR | DAX Index vs. ALTAIR RES INC | DAX Index vs. Fair Isaac Corp | DAX Index vs. Taiwan Semiconductor Manufacturing |
| Fairfax Financial vs. Cal Maine Foods | Fairfax Financial vs. Lifeway Foods | Fairfax Financial vs. Austevoll Seafood ASA | Fairfax Financial vs. MGIC INVESTMENT |
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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