Correlation Between Fairfax Fin and TeraGo
Can any of the company-specific risk be diversified away by investing in both Fairfax Fin and TeraGo 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 TeraGo 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 TeraGo Inc, you can compare the effects of market volatilities on Fairfax Fin and TeraGo 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 TeraGo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Fin and TeraGo.
Diversification Opportunities for Fairfax Fin and TeraGo
-0.94 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fairfax and TeraGo is -0.94. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Fin Hld and TeraGo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TeraGo Inc 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 TeraGo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TeraGo Inc has no effect on the direction of Fairfax Fin i.e., Fairfax Fin and TeraGo go up and down completely randomly.
Pair Corralation between Fairfax Fin and TeraGo
Assuming the 90 days trading horizon Fairfax Fin Hld is expected to generate 0.22 times more return on investment than TeraGo. However, Fairfax Fin Hld is 4.58 times less risky than TeraGo. It trades about 0.13 of its potential returns per unit of risk. TeraGo Inc is currently generating about -0.09 per unit of risk. If you would invest 2,172 in Fairfax Fin Hld on September 3, 2024 and sell it today you would earn a total of 349.00 from holding Fairfax Fin Hld or generate 16.07% 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. TeraGo Inc
Performance |
| Timeline |
| Fairfax Fin Hld |
| TeraGo Inc |
Fairfax Fin and TeraGo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Fin and TeraGo
The main advantage of trading using opposite Fairfax Fin and TeraGo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Fin position performs unexpectedly, TeraGo 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 TeraGo will offset losses from the drop in TeraGo's long position.| Fairfax Fin vs. Enerev5 Metals | Fairfax Fin vs. Primaris Retail RE | Fairfax Fin vs. Computer Modelling Group | Fairfax Fin vs. Datable Technology Corp |
| TeraGo vs. Evertz Technologies Limited | TeraGo vs. Vecima Networks | TeraGo vs. EcoSynthetix | TeraGo vs. Baylin Technologies |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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