Correlation Between SWK Holdings and Helios Fairfax
Can any of the company-specific risk be diversified away by investing in both SWK Holdings and Helios Fairfax 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 SWK Holdings and Helios Fairfax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SWK Holdings Corp and Helios Fairfax Partners, you can compare the effects of market volatilities on SWK Holdings and Helios Fairfax 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 SWK Holdings with a short position of Helios Fairfax. Check out your portfolio center. Please also check ongoing floating volatility patterns of SWK Holdings and Helios Fairfax.
Diversification Opportunities for SWK Holdings and Helios Fairfax
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SWK and Helios is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding SWK Holdings Corp and Helios Fairfax Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Helios Fairfax Partners and SWK Holdings 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 SWK Holdings Corp are associated (or correlated) with Helios Fairfax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Helios Fairfax Partners has no effect on the direction of SWK Holdings i.e., SWK Holdings and Helios Fairfax go up and down completely randomly.
Pair Corralation between SWK Holdings and Helios Fairfax
Given the investment horizon of 90 days SWK Holdings Corp is expected to under-perform the Helios Fairfax. But the stock apears to be less risky and, when comparing its historical volatility, SWK Holdings Corp is 1.32 times less risky than Helios Fairfax. The stock trades about -0.01 of its potential returns per unit of risk. The Helios Fairfax Partners is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 249.00 in Helios Fairfax Partners on September 12, 2024 and sell it today you would earn a total of 26.00 from holding Helios Fairfax Partners or generate 10.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
SWK Holdings Corp vs. Helios Fairfax Partners
Performance |
| Timeline |
| SWK Holdings Corp |
| Helios Fairfax Partners |
SWK Holdings and Helios Fairfax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SWK Holdings and Helios Fairfax
The main advantage of trading using opposite SWK Holdings and Helios Fairfax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SWK Holdings position performs unexpectedly, Helios Fairfax 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 Helios Fairfax will offset losses from the drop in Helios Fairfax's long position.| SWK Holdings vs. Invesco Trust For | SWK Holdings vs. Invesco California Value | SWK Holdings vs. GAMCO Natural Resources | SWK Holdings vs. Nuveen Pennsylvania Quality |
| Helios Fairfax vs. Nuveen Global High | Helios Fairfax vs. New America High | Helios Fairfax vs. Brookfield Business Corp | Helios Fairfax vs. Elysee Development Corp |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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