Correlation Between Fairfax Financial and Apple
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Apple 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 Apple 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 Apple Inc CDR, you can compare the effects of market volatilities on Fairfax Financial and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Apple.
Diversification Opportunities for Fairfax Financial and Apple
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fairfax and Apple is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Apple Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc CDR 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc CDR has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Apple go up and down completely randomly.
Pair Corralation between Fairfax Financial and Apple
Assuming the 90 days trading horizon Fairfax Financial Holdings is expected to generate 0.39 times more return on investment than Apple. However, Fairfax Financial Holdings is 2.55 times less risky than Apple. It trades about -0.01 of its potential returns per unit of risk. Apple Inc CDR is currently generating about -0.09 per unit of risk. If you would invest 2,220 in Fairfax Financial Holdings on November 8, 2024 and sell it today you would lose (5.00) from holding Fairfax Financial Holdings or give up 0.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fairfax Financial Holdings vs. Apple Inc CDR
Performance |
| Timeline |
| Fairfax Financial |
| Apple Inc CDR |
Fairfax Financial and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Apple
The main advantage of trading using opposite Fairfax Financial and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| Fairfax Financial vs. NeXGold Mining Corp | Fairfax Financial vs. Magna Mining | Fairfax Financial vs. High Liner Foods | Fairfax Financial vs. Kootenay Silver |
| Apple vs. Northstar Clean Technologies | Apple vs. Gamehost | Apple vs. Exco Technologies Limited | Apple vs. Broadcom |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |