Correlation Between Fairfax Financial and International Metals
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and International Metals 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 International Metals 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 International Metals Mining, you can compare the effects of market volatilities on Fairfax Financial and International Metals 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 International Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and International Metals.
Diversification Opportunities for Fairfax Financial and International Metals
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fairfax and International is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and International Metals Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Metals 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 International Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Metals has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and International Metals go up and down completely randomly.
Pair Corralation between Fairfax Financial and International Metals
Assuming the 90 days trading horizon Fairfax Financial Holdings is expected to generate 0.25 times more return on investment than International Metals. However, Fairfax Financial Holdings is 4.0 times less risky than International Metals. It trades about 0.15 of its potential returns per unit of risk. International Metals Mining is currently generating about -0.11 per unit of risk. If you would invest 2,180 in Fairfax Financial Holdings on September 24, 2024 and sell it today you would earn a total of 78.00 from holding Fairfax Financial Holdings or generate 3.58% 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. International Metals Mining
Performance |
| Timeline |
| Fairfax Financial |
| International Metals |
Fairfax Financial and International Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and International Metals
The main advantage of trading using opposite Fairfax Financial and International Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, International Metals 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 International Metals will offset losses from the drop in International Metals' long position.The idea behind Fairfax Financial Holdings and International Metals Mining pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| International Metals vs. 2028 Investment Grade | International Metals vs. NeuPath Health | International Metals vs. Constellation Software | International Metals vs. Sparx Technology |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |