Correlation Between Fairfax Fin and Pine Cliff
Can any of the company-specific risk be diversified away by investing in both Fairfax Fin and Pine Cliff 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 Pine Cliff 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 Pine Cliff Energy, you can compare the effects of market volatilities on Fairfax Fin and Pine Cliff 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 Pine Cliff. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Fin and Pine Cliff.
Diversification Opportunities for Fairfax Fin and Pine Cliff
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fairfax and Pine is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Fin Hld and Pine Cliff Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pine Cliff Energy 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 Pine Cliff. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pine Cliff Energy has no effect on the direction of Fairfax Fin i.e., Fairfax Fin and Pine Cliff go up and down completely randomly.
Pair Corralation between Fairfax Fin and Pine Cliff
Assuming the 90 days trading horizon Fairfax Fin Hld is expected to generate 0.86 times more return on investment than Pine Cliff. However, Fairfax Fin Hld is 1.17 times less risky than Pine Cliff. It trades about 0.22 of its potential returns per unit of risk. Pine Cliff Energy is currently generating about -0.1 per unit of risk. If you would invest 1,760 in Fairfax Fin Hld on August 30, 2024 and sell it today you would earn a total of 398.00 from holding Fairfax Fin Hld or generate 22.61% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Fairfax Fin Hld vs. Pine Cliff Energy
Performance |
Timeline |
Fairfax Fin Hld |
Pine Cliff Energy |
Fairfax Fin and Pine Cliff Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fairfax Fin and Pine Cliff
The main advantage of trading using opposite Fairfax Fin and Pine Cliff positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Fin position performs unexpectedly, Pine Cliff 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 Pine Cliff will offset losses from the drop in Pine Cliff's long position.Fairfax Fin vs. Electra Battery Materials | Fairfax Fin vs. Labrador Iron Ore | Fairfax Fin vs. Primaris Retail RE | Fairfax Fin vs. Dream Office Real |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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