Correlation Between Fairfax Fin and Fab Form
Can any of the company-specific risk be diversified away by investing in both Fairfax Fin and Fab Form 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 Fab Form 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 Fab Form Industries, you can compare the effects of market volatilities on Fairfax Fin and Fab Form 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 Fab Form. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Fin and Fab Form.
Diversification Opportunities for Fairfax Fin and Fab Form
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fairfax and Fab is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Fin Hld and Fab Form Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fab Form Industries 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 Fab Form. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fab Form Industries has no effect on the direction of Fairfax Fin i.e., Fairfax Fin and Fab Form go up and down completely randomly.
Pair Corralation between Fairfax Fin and Fab Form
Assuming the 90 days trading horizon Fairfax Fin Hld is expected to generate 0.26 times more return on investment than Fab Form. However, Fairfax Fin Hld is 3.91 times less risky than Fab Form. It trades about 0.38 of its potential returns per unit of risk. Fab Form Industries is currently generating about -0.09 per unit of risk. If you would invest 2,251 in Fairfax Fin Hld on August 30, 2024 and sell it today you would earn a total of 260.00 from holding Fairfax Fin Hld or generate 11.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Fairfax Fin Hld vs. Fab Form Industries
Performance |
| Timeline |
| Fairfax Fin Hld |
| Fab Form Industries |
Fairfax Fin and Fab Form Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Fin and Fab Form
The main advantage of trading using opposite Fairfax Fin and Fab Form positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Fin position performs unexpectedly, Fab Form 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 Fab Form will offset losses from the drop in Fab Form's long position.| Fairfax Fin vs. Primaris Retail RE | Fairfax Fin vs. Lion One Metals | Fairfax Fin vs. Enerev5 Metals | Fairfax Fin vs. Canlan Ice Sports |
| Fab Form vs. Atlas Engineered Products | Fab Form vs. Inventronics | Fab Form vs. Imaflex | Fab Form vs. AirIQ Inc |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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