Correlation Between Fairfax Fin and E L
Can any of the company-specific risk be diversified away by investing in both Fairfax Fin and E L 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 E L 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 E L Financial 3, you can compare the effects of market volatilities on Fairfax Fin and E L 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 E L. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Fin and E L.
Diversification Opportunities for Fairfax Fin and E L
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fairfax and ELF-PH is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Fin Hld and E L Financial 3 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E L Financial 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 E L. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E L Financial has no effect on the direction of Fairfax Fin i.e., Fairfax Fin and E L go up and down completely randomly.
Pair Corralation between Fairfax Fin and E L
Assuming the 90 days trading horizon Fairfax Fin Hld is expected to generate 1.56 times more return on investment than E L. However, Fairfax Fin is 1.56 times more volatile than E L Financial 3. It trades about 0.12 of its potential returns per unit of risk. E L Financial 3 is currently generating about 0.08 per unit of risk. If you would invest 2,190 in Fairfax Fin Hld on September 1, 2024 and sell it today you would earn a total of 331.00 from holding Fairfax Fin Hld or generate 15.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fairfax Fin Hld vs. E L Financial 3
Performance |
| Timeline |
| Fairfax Fin Hld |
| E L Financial |
Fairfax Fin and E L Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Fin and E L
The main advantage of trading using opposite Fairfax Fin and E L positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Fin position performs unexpectedly, E L 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 E L will offset losses from the drop in E L's long position.| Fairfax Fin vs. AGF Management Limited | Fairfax Fin vs. Guru Organic Energy | Fairfax Fin vs. Enerev5 Metals | Fairfax Fin vs. Computer Modelling Group |
| E L vs. Fairfax Financial Holdings | E L vs. Fairfax Financial Holdings | E L vs. Fairfax Financial Holdings | E L vs. Fairfax Financial Holdings |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |