Correlation Between Fairfax Financial and Innergex Renewable
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Innergex Renewable 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 Financial and Innergex Renewable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fairfax Financial Holdings and Innergex Renewable Energy, you can compare the effects of market volatilities on Fairfax Financial and Innergex Renewable 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 Financial with a short position of Innergex Renewable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Innergex Renewable.
Diversification Opportunities for Fairfax Financial and Innergex Renewable
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fairfax and Innergex is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Innergex Renewable Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innergex Renewable Energy and Fairfax Financial 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 Financial Holdings are associated (or correlated) with Innergex Renewable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innergex Renewable Energy has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Innergex Renewable go up and down completely randomly.
Pair Corralation between Fairfax Financial and Innergex Renewable
Assuming the 90 days trading horizon Fairfax Financial Holdings is expected to generate 0.39 times more return on investment than Innergex Renewable. However, Fairfax Financial Holdings is 2.55 times less risky than Innergex Renewable. It trades about 0.16 of its potential returns per unit of risk. Innergex Renewable Energy is currently generating about 0.01 per unit of risk. If you would invest 1,882 in Fairfax Financial Holdings on September 3, 2024 and sell it today you would earn a total of 657.00 from holding Fairfax Financial Holdings or generate 34.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fairfax Financial Holdings vs. Innergex Renewable Energy
Performance |
| Timeline |
| Fairfax Financial |
| Innergex Renewable Energy |
Fairfax Financial and Innergex Renewable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Innergex Renewable
The main advantage of trading using opposite Fairfax Financial and Innergex Renewable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Innergex Renewable 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 Innergex Renewable will offset losses from the drop in Innergex Renewable's long position.| Fairfax Financial vs. Plaza Retail REIT | Fairfax Financial vs. Talon Metals Corp | Fairfax Financial vs. Everyday People Financial | Fairfax Financial vs. Lion One Metals |
| Innergex Renewable vs. Boralex | Innergex Renewable vs. Northland Power | Innergex Renewable vs. Capital Power | Innergex Renewable vs. Brookfield Renewable Partners |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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