Correlation Between Fairfax Fin and Power
Can any of the company-specific risk be diversified away by investing in both Fairfax Fin and Power 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 Power 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 Power, you can compare the effects of market volatilities on Fairfax Fin and Power 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 Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Fin and Power.
Diversification Opportunities for Fairfax Fin and Power
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fairfax and Power is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Fin Hld and Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power 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 Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power has no effect on the direction of Fairfax Fin i.e., Fairfax Fin and Power go up and down completely randomly.
Pair Corralation between Fairfax Fin and Power
If you would invest 2,499 in Fairfax Fin Hld on November 1, 2024 and sell it today you would earn a total of 0.00 from holding Fairfax Fin Hld or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 9.52% |
| Values | Daily Returns |
Fairfax Fin Hld vs. Power
Performance |
| Timeline |
| Fairfax Fin Hld |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Power |
Fairfax Fin and Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Fin and Power
The main advantage of trading using opposite Fairfax Fin and Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Fin position performs unexpectedly, Power 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 Power will offset losses from the drop in Power's long position.| Fairfax Fin vs. Osisko Metals | Fairfax Fin vs. South Pacific Metals | Fairfax Fin vs. Solid Impact Investments | Fairfax Fin vs. CNJ Capital Investments |
| Power vs. Great West Lifeco | Power vs. Manulife Financial Corp | Power vs. Sun Life Financial | Power vs. Fortis 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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