Correlation Between Fairfax Financial and Manulife Finl
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Manulife Finl 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 Manulife Finl 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 Manulife Finl Srs, you can compare the effects of market volatilities on Fairfax Financial and Manulife Finl 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 Manulife Finl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Manulife Finl.
Diversification Opportunities for Fairfax Financial and Manulife Finl
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fairfax and Manulife is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Manulife Finl Srs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Finl Srs 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 Manulife Finl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manulife Finl Srs has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Manulife Finl go up and down completely randomly.
Pair Corralation between Fairfax Financial and Manulife Finl
Assuming the 90 days trading horizon Fairfax Financial Holdings is expected to generate 3.34 times more return on investment than Manulife Finl. However, Fairfax Financial is 3.34 times more volatile than Manulife Finl Srs. It trades about 0.33 of its potential returns per unit of risk. Manulife Finl Srs is currently generating about -0.22 per unit of risk. If you would invest 1,851 in Fairfax Financial Holdings on August 29, 2024 and sell it today you would earn a total of 339.00 from holding Fairfax Financial Holdings or generate 18.31% 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. Manulife Finl Srs
Performance |
| Timeline |
| Fairfax Financial |
| Manulife Finl Srs |
Fairfax Financial and Manulife Finl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Manulife Finl
The main advantage of trading using opposite Fairfax Financial and Manulife Finl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Manulife Finl 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 Manulife Finl will offset losses from the drop in Manulife Finl's long position.| Fairfax Financial vs. Reliq Health Technologies | Fairfax Financial vs. Andlauer Healthcare Gr | Fairfax Financial vs. TUT Fitness Group | Fairfax Financial vs. CVW CleanTech |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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