Correlation Between United Natural and Fairfax Financial
Can any of the company-specific risk be diversified away by investing in both United Natural and Fairfax Financial 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 United Natural and Fairfax Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Natural Foods and Fairfax Financial Holdings, you can compare the effects of market volatilities on United Natural 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 United Natural with a short position of Fairfax Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and Fairfax Financial.
Diversification Opportunities for United Natural and Fairfax Financial
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between United and Fairfax is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and Fairfax Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairfax Financial and United Natural 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 United Natural Foods 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 United Natural i.e., United Natural and Fairfax Financial go up and down completely randomly.
Pair Corralation between United Natural and Fairfax Financial
Assuming the 90 days horizon United Natural is expected to generate 2.11 times less return on investment than Fairfax Financial. In addition to that, United Natural is 2.33 times more volatile than Fairfax Financial Holdings. It trades about 0.02 of its total potential returns per unit of risk. Fairfax Financial Holdings is currently generating about 0.11 per unit of volatility. If you would invest 69,754 in Fairfax Financial Holdings on August 31, 2024 and sell it today you would earn a total of 63,846 from holding Fairfax Financial Holdings or generate 91.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.74% |
| Values | Daily Returns |
United Natural Foods vs. Fairfax Financial Holdings
Performance |
| Timeline |
| United Natural Foods |
| Fairfax Financial |
United Natural and Fairfax Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and Fairfax Financial
The main advantage of trading using opposite United Natural and Fairfax Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural 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.| United Natural vs. Charter Communications | United Natural vs. Perseus Mining Limited | United Natural vs. Jacquet Metal Service | United Natural vs. SBA Communications Corp |
| Fairfax Financial vs. Constellation Software | Fairfax Financial vs. Alfa Financial Software | Fairfax Financial vs. AXWAY SOFTWARE EO | Fairfax Financial vs. NORWEGIAN AIR SHUT |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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