Correlation Between CVW CleanTech and Fairfax Financial
Can any of the company-specific risk be diversified away by investing in both CVW CleanTech 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 CVW CleanTech and Fairfax Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVW CleanTech and Fairfax Financial Holdings, you can compare the effects of market volatilities on CVW CleanTech 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 CVW CleanTech with a short position of Fairfax Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVW CleanTech and Fairfax Financial.
Diversification Opportunities for CVW CleanTech and Fairfax Financial
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between CVW and Fairfax is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding CVW CleanTech and Fairfax Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairfax Financial and CVW CleanTech 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 CVW CleanTech 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 CVW CleanTech i.e., CVW CleanTech and Fairfax Financial go up and down completely randomly.
Pair Corralation between CVW CleanTech and Fairfax Financial
Assuming the 90 days horizon CVW CleanTech is expected to under-perform the Fairfax Financial. In addition to that, CVW CleanTech is 6.33 times more volatile than Fairfax Financial Holdings. It trades about -0.05 of its total potential returns per unit of risk. Fairfax Financial Holdings is currently generating about -0.06 per unit of volatility. If you would invest 2,445 in Fairfax Financial Holdings on November 5, 2024 and sell it today you would lose (13.00) from holding Fairfax Financial Holdings or give up 0.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVW CleanTech vs. Fairfax Financial Holdings
Performance |
| Timeline |
| CVW CleanTech |
| Fairfax Financial |
CVW CleanTech and Fairfax Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVW CleanTech and Fairfax Financial
The main advantage of trading using opposite CVW CleanTech and Fairfax Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVW CleanTech 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.| CVW CleanTech vs. Wildsky Resources | CVW CleanTech vs. Golden Pursuit Resources | CVW CleanTech vs. ExGen Resources | CVW CleanTech vs. Fidelity Minerals Corp |
| Fairfax Financial vs. Goodfood Market Corp | Fairfax Financial vs. Quorum Information Technologies | Fairfax Financial vs. Cogeco Communications | Fairfax Financial vs. Sangoma Technologies Corp |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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