Correlation Between Fairfax Fin and Rakovina Therapeutics
Can any of the company-specific risk be diversified away by investing in both Fairfax Fin and Rakovina Therapeutics 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 Rakovina Therapeutics 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 Rakovina Therapeutics, you can compare the effects of market volatilities on Fairfax Fin and Rakovina Therapeutics 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 Rakovina Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Fin and Rakovina Therapeutics.
Diversification Opportunities for Fairfax Fin and Rakovina Therapeutics
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fairfax and Rakovina is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Fin Hld and Rakovina Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rakovina Therapeutics 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 Rakovina Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rakovina Therapeutics has no effect on the direction of Fairfax Fin i.e., Fairfax Fin and Rakovina Therapeutics go up and down completely randomly.
Pair Corralation between Fairfax Fin and Rakovina Therapeutics
Assuming the 90 days trading horizon Fairfax Fin is expected to generate 2.52 times less return on investment than Rakovina Therapeutics. But when comparing it to its historical volatility, Fairfax Fin Hld is 9.32 times less risky than Rakovina Therapeutics. It trades about 0.12 of its potential returns per unit of risk. Rakovina Therapeutics is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 16.00 in Rakovina Therapeutics on September 12, 2024 and sell it today you would lose (2.00) from holding Rakovina Therapeutics or give up 12.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fairfax Fin Hld vs. Rakovina Therapeutics
Performance |
| Timeline |
| Fairfax Fin Hld |
| Rakovina Therapeutics |
Fairfax Fin and Rakovina Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Fin and Rakovina Therapeutics
The main advantage of trading using opposite Fairfax Fin and Rakovina Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Fin position performs unexpectedly, Rakovina Therapeutics 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 Rakovina Therapeutics will offset losses from the drop in Rakovina Therapeutics' long position.| Fairfax Fin vs. Intact Financial | Fairfax Fin vs. Fairfax Financial Holdings | Fairfax Fin vs. Fairfax Financial Holdings | Fairfax Fin vs. Intact Financial Corp |
| Rakovina Therapeutics vs. Premium Income | Rakovina Therapeutics vs. E L Financial Corp | Rakovina Therapeutics vs. Fairfax Financial Holdings | Rakovina Therapeutics vs. Fairfax Fin Hld |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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