Correlation Between Fairfax Financial and Sienna Senior
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Sienna Senior 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 Sienna Senior 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 Sienna Senior Living, you can compare the effects of market volatilities on Fairfax Financial and Sienna Senior 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 Sienna Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Sienna Senior.
Diversification Opportunities for Fairfax Financial and Sienna Senior
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fairfax and Sienna is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Sienna Senior Living in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sienna Senior Living 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 Sienna Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sienna Senior Living has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Sienna Senior go up and down completely randomly.
Pair Corralation between Fairfax Financial and Sienna Senior
Assuming the 90 days trading horizon Fairfax Financial Holdings is expected to generate 0.28 times more return on investment than Sienna Senior. However, Fairfax Financial Holdings is 3.55 times less risky than Sienna Senior. It trades about -0.01 of its potential returns per unit of risk. Sienna Senior Living is currently generating about -0.18 per unit of risk. If you would invest 2,240 in Fairfax Financial Holdings on October 25, 2024 and sell it today you would lose (2.00) from holding Fairfax Financial Holdings or give up 0.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fairfax Financial Holdings vs. Sienna Senior Living
Performance |
| Timeline |
| Fairfax Financial |
| Sienna Senior Living |
Fairfax Financial and Sienna Senior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Sienna Senior
The main advantage of trading using opposite Fairfax Financial and Sienna Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Sienna Senior 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 Sienna Senior will offset losses from the drop in Sienna Senior's long position.| Fairfax Financial vs. Canadian Utilities Limited | Fairfax Financial vs. Broadcom | Fairfax Financial vs. Advent Wireless | Fairfax Financial vs. XXIX Metal Corp |
| Sienna Senior vs. Extendicare | Sienna Senior vs. Chartwell Retirement Residences | Sienna Senior vs. NorthWest Healthcare Properties | Sienna Senior vs. Dream Industrial 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |