Correlation Between Fairfax Fin and Profound Medical
Can any of the company-specific risk be diversified away by investing in both Fairfax Fin and Profound Medical 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 Profound Medical 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 Profound Medical Corp, you can compare the effects of market volatilities on Fairfax Fin and Profound Medical 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 Profound Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Fin and Profound Medical.
Diversification Opportunities for Fairfax Fin and Profound Medical
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fairfax and Profound is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Fin Hld and Profound Medical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Profound Medical Corp 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 Profound Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Profound Medical Corp has no effect on the direction of Fairfax Fin i.e., Fairfax Fin and Profound Medical go up and down completely randomly.
Pair Corralation between Fairfax Fin and Profound Medical
Assuming the 90 days trading horizon Fairfax Fin Hld is expected to generate 0.33 times more return on investment than Profound Medical. However, Fairfax Fin Hld is 3.02 times less risky than Profound Medical. It trades about 0.23 of its potential returns per unit of risk. Profound Medical Corp is currently generating about 0.01 per unit of risk. If you would invest 2,206 in Fairfax Fin Hld on September 12, 2024 and sell it today you would earn a total of 318.00 from holding Fairfax Fin Hld or generate 14.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fairfax Fin Hld vs. Profound Medical Corp
Performance |
| Timeline |
| Fairfax Fin Hld |
| Profound Medical Corp |
Fairfax Fin and Profound Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Fin and Profound Medical
The main advantage of trading using opposite Fairfax Fin and Profound Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Fin position performs unexpectedly, Profound Medical 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 Profound Medical will offset losses from the drop in Profound Medical's long position.| Fairfax Fin vs. Upstart Investments | Fairfax Fin vs. Data Communications Management | Fairfax Fin vs. Boat Rocker Media | Fairfax Fin vs. Western Investment |
| Profound Medical vs. JPMorgan Chase Co | Profound Medical vs. Bank of America | Profound Medical vs. Toronto Dominion Bank | Profound Medical vs. Royal Bank of |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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