Correlation Between Fairfax Fin and Storage Vault
Can any of the company-specific risk be diversified away by investing in both Fairfax Fin and Storage Vault 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 Storage Vault 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 Storage Vault Canada, you can compare the effects of market volatilities on Fairfax Fin and Storage Vault 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 Storage Vault. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Fin and Storage Vault.
Diversification Opportunities for Fairfax Fin and Storage Vault
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fairfax and Storage is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Fin Hld and Storage Vault Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Storage Vault Canada 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 Storage Vault. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Storage Vault Canada has no effect on the direction of Fairfax Fin i.e., Fairfax Fin and Storage Vault go up and down completely randomly.
Pair Corralation between Fairfax Fin and Storage Vault
Assuming the 90 days trading horizon Fairfax Fin Hld is expected to generate 0.49 times more return on investment than Storage Vault. However, Fairfax Fin Hld is 2.03 times less risky than Storage Vault. It trades about 0.11 of its potential returns per unit of risk. Storage Vault Canada is currently generating about -0.04 per unit of risk. If you would invest 1,572 in Fairfax Fin Hld on August 26, 2024 and sell it today you would earn a total of 938.00 from holding Fairfax Fin Hld or generate 59.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fairfax Fin Hld vs. Storage Vault Canada
Performance |
| Timeline |
| Fairfax Fin Hld |
| Storage Vault Canada |
Fairfax Fin and Storage Vault Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Fin and Storage Vault
The main advantage of trading using opposite Fairfax Fin and Storage Vault positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Fin position performs unexpectedly, Storage Vault 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 Storage Vault will offset losses from the drop in Storage Vault's long position.| Fairfax Fin vs. Intact Financial | Fairfax Fin vs. Fairfax Financial Holdings | Fairfax Fin vs. Intact Financial Corp |
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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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