Correlation Between Horace Mann and Fairfax Financial

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

By analyzing existing cross correlation between Horace Mann Educators and Fairfax Financial Holdings, you can compare the effects of market volatilities on Horace Mann 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 Horace Mann with a short position of Fairfax Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Horace Mann and Fairfax Financial.

Diversification Opportunities for Horace Mann and Fairfax Financial

0.83

Correlation Coefficient

Horace Mann  Fairfax Financial

Very poor diversification

The 3 months correlation between Horace and Fairfax is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Horace Mann Educators and Fairfax Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairfax Financial and Horace Mann 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 Horace Mann Educators 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 Horace Mann i.e., Horace Mann and Fairfax Financial go up and down completely randomly.

Pair Corralation between Horace Mann and Fairfax Financial

If you would invest  3,636  in Horace Mann Educators on September 21, 2024 and sell it today you would earn a total of  307.00  from holding Horace Mann Educators or generate 8.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	2.33%
Values	Daily Returns

Horace Mann Educators  vs.  Fairfax Financial Holdings

Horace Mann Educators

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Horace Mann Educators are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Horace Mann displayed solid returns over the last few months and may actually be approaching a breakup point.

Fairfax Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fairfax Financial Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, Fairfax Financial is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Horace Mann and Fairfax Financial

The main advantage of trading using opposite Horace Mann and Fairfax Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Horace Mann 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.

The idea behind Horace Mann Educators and Fairfax Financial Holdings 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.