Correlation Between Brookfield Office and Fairfax Financial
Can any of the company-specific risk be diversified away by investing in both Brookfield Office 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 Brookfield Office and Fairfax Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brookfield Office Properties and Fairfax Financial Holdings, you can compare the effects of market volatilities on Brookfield Office 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 Brookfield Office with a short position of Fairfax Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Office and Fairfax Financial.
Diversification Opportunities for Brookfield Office and Fairfax Financial
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Brookfield and Fairfax is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Office Properties and Fairfax Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairfax Financial and Brookfield Office 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 Brookfield Office Properties 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 Brookfield Office i.e., Brookfield Office and Fairfax Financial go up and down completely randomly.
Pair Corralation between Brookfield Office and Fairfax Financial
Assuming the 90 days trading horizon Brookfield Office is expected to generate 1.79 times less return on investment than Fairfax Financial. But when comparing it to its historical volatility, Brookfield Office Properties is 1.57 times less risky than Fairfax Financial. It trades about 0.25 of its potential returns per unit of risk. Fairfax Financial Holdings is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 2,228 in Fairfax Financial Holdings on September 2, 2024 and sell it today you would earn a total of 172.00 from holding Fairfax Financial Holdings or generate 7.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brookfield Office Properties vs. Fairfax Financial Holdings
Performance |
| Timeline |
| Brookfield Office |
| Fairfax Financial |
Brookfield Office and Fairfax Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Office and Fairfax Financial
The main advantage of trading using opposite Brookfield Office and Fairfax Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Office 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.| Brookfield Office vs. Fairfax Financial Holdings | Brookfield Office vs. iShares Canadian HYBrid | Brookfield Office vs. Brompton European Dividend | Brookfield Office vs. Solar Alliance Energy |
| Fairfax Financial vs. Endeavour Silver Corp | Fairfax Financial vs. Monument Mining Limited | Fairfax Financial vs. TGS Esports | Fairfax Financial vs. Perseus Mining |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |