Correlation Between Fairfax Fin and Leveljump Healthcare

Can any of the company-specific risk be diversified away by investing in both Fairfax Fin and Leveljump Healthcare 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 Fin and Leveljump Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fairfax Fin Hld and Leveljump Healthcare Corp, you can compare the effects of market volatilities on Fairfax Fin and Leveljump Healthcare 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 Fin with a short position of Leveljump Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Fin and Leveljump Healthcare.

Diversification Opportunities for Fairfax Fin and Leveljump Healthcare

0.0

Correlation Coefficient

Fairfax Fin  Leveljump Healthcare

Pay attention - limited upside

The 3 months correlation between Fairfax and Leveljump is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Fin Hld and Leveljump Healthcare Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leveljump Healthcare Corp and Fairfax Fin 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 Fin Hld are associated (or correlated) with Leveljump Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leveljump Healthcare Corp has no effect on the direction of Fairfax Fin i.e., Fairfax Fin and Leveljump Healthcare go up and down completely randomly.

Pair Corralation between Fairfax Fin and Leveljump Healthcare

If you would invest  2,340  in Fairfax Fin Hld on September 12, 2024 and sell it today you would earn a total of  184.00  from holding Fairfax Fin Hld or generate 7.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Fairfax Fin Hld  vs.  Leveljump Healthcare Corp

Fairfax Fin Hld

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fairfax Fin Hld are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical indicators, Fairfax Fin sustained solid returns over the last few months and may actually be approaching a breakup point.

Leveljump Healthcare Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leveljump Healthcare Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable primary indicators, Leveljump Healthcare is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Fairfax Fin and Leveljump Healthcare

The main advantage of trading using opposite Fairfax Fin and Leveljump Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Fin position performs unexpectedly, Leveljump Healthcare 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 Leveljump Healthcare will offset losses from the drop in Leveljump Healthcare's long position.

The idea behind Fairfax Fin Hld and Leveljump Healthcare Corp 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.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.