Correlation Between Fairfax Financial and CCL Industries
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and CCL Industries 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 CCL Industries 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 CCL Industries, you can compare the effects of market volatilities on Fairfax Financial and CCL Industries 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 CCL Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and CCL Industries.
Diversification Opportunities for Fairfax Financial and CCL Industries
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fairfax and CCL is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and CCL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCL Industries 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 CCL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCL Industries has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and CCL Industries go up and down completely randomly.
Pair Corralation between Fairfax Financial and CCL Industries
Assuming the 90 days trading horizon Fairfax Financial Holdings is expected to generate 0.77 times more return on investment than CCL Industries. However, Fairfax Financial Holdings is 1.31 times less risky than CCL Industries. It trades about 0.15 of its potential returns per unit of risk. CCL Industries is currently generating about 0.04 per unit of risk. If you would invest 1,314 in Fairfax Financial Holdings on September 12, 2024 and sell it today you would earn a total of 981.00 from holding Fairfax Financial Holdings or generate 74.66% 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. CCL Industries
Performance |
| Timeline |
| Fairfax Financial |
| CCL Industries |
Fairfax Financial and CCL Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and CCL Industries
The main advantage of trading using opposite Fairfax Financial and CCL Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, CCL Industries 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 CCL Industries will offset losses from the drop in CCL Industries' long position.| Fairfax Financial vs. Intact Financial | Fairfax Financial vs. Fairfax Financial Holdings | Fairfax Financial vs. Fairfax Fin Hld | Fairfax Financial vs. Intact Financial Corp |
| CCL Industries vs. Ressources Minieres Radisson | CCL Industries vs. Galantas Gold Corp | CCL Industries vs. Red Pine Exploration | CCL Industries vs. Kore Mining |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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