Correlation Between Fairfax Fin and Urbanfund Corp
Can any of the company-specific risk be diversified away by investing in both Fairfax Fin and Urbanfund Corp 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 Urbanfund Corp 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 Urbanfund Corp, you can compare the effects of market volatilities on Fairfax Fin and Urbanfund Corp 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 Urbanfund Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Fin and Urbanfund Corp.
Diversification Opportunities for Fairfax Fin and Urbanfund Corp
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fairfax and Urbanfund is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Fin Hld and Urbanfund Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Urbanfund 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 Urbanfund Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Urbanfund Corp has no effect on the direction of Fairfax Fin i.e., Fairfax Fin and Urbanfund Corp go up and down completely randomly.
Pair Corralation between Fairfax Fin and Urbanfund Corp
Assuming the 90 days trading horizon Fairfax Fin is expected to generate 1.04 times less return on investment than Urbanfund Corp. But when comparing it to its historical volatility, Fairfax Fin Hld is 1.35 times less risky than Urbanfund Corp. It trades about 0.33 of its potential returns per unit of risk. Urbanfund Corp is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 81.00 in Urbanfund Corp on August 26, 2024 and sell it today you would earn a total of 8.00 from holding Urbanfund Corp or generate 9.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Fairfax Fin Hld vs. Urbanfund Corp
Performance |
| Timeline |
| Fairfax Fin Hld |
| Urbanfund Corp |
Fairfax Fin and Urbanfund Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Fin and Urbanfund Corp
The main advantage of trading using opposite Fairfax Fin and Urbanfund Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Fin position performs unexpectedly, Urbanfund Corp 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 Urbanfund Corp will offset losses from the drop in Urbanfund Corp's 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 |
| Urbanfund Corp vs. Westbond Enterprises Corp | Urbanfund Corp vs. Imperial Equities | Urbanfund Corp vs. Findev Inc | Urbanfund Corp vs. Canadian Net Real |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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