Correlation Between Fairholme Fund and Fpa Crescent

Can any of the company-specific risk be diversified away by investing in both Fairholme Fund and Fpa Crescent 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 Fairholme Fund and Fpa Crescent into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Fairholme Fund and Fpa Crescent Fund, you can compare the effects of market volatilities on Fairholme Fund and Fpa Crescent 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 Fairholme Fund with a short position of Fpa Crescent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairholme Fund and Fpa Crescent.

Diversification Opportunities for Fairholme Fund and Fpa Crescent

-0.75

Correlation Coefficient

Fairholme Fund  Fpa Crescent

Pay attention - limited upside

The 3 months correlation between Fairholme and Fpa is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding The Fairholme Fund and Fpa Crescent Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fpa Crescent and Fairholme Fund 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 The Fairholme Fund are associated (or correlated) with Fpa Crescent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fpa Crescent has no effect on the direction of Fairholme Fund i.e., Fairholme Fund and Fpa Crescent go up and down completely randomly.

Pair Corralation between Fairholme Fund and Fpa Crescent

Assuming the 90 days horizon The Fairholme Fund is expected to under-perform the Fpa Crescent. In addition to that, Fairholme Fund is 2.32 times more volatile than Fpa Crescent Fund. It trades about -0.24 of its total potential returns per unit of risk. Fpa Crescent Fund is currently generating about 0.17 per unit of volatility. If you would invest  4,134  in Fpa Crescent Fund on September 15, 2024 and sell it today you would earn a total of  215.00  from holding Fpa Crescent Fund or generate 5.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

The Fairholme Fund  vs.  Fpa Crescent Fund

Fairholme Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Fairholme Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Fpa Crescent

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fpa Crescent Fund are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Fpa Crescent is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fairholme Fund and Fpa Crescent

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

The idea behind The Fairholme Fund and Fpa Crescent Fund 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.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.