Correlation Between Fairfax Financial and Postmedia Network
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Postmedia Network 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 Postmedia Network 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 Postmedia Network Canada, you can compare the effects of market volatilities on Fairfax Financial and Postmedia Network 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 Postmedia Network. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Postmedia Network.
Diversification Opportunities for Fairfax Financial and Postmedia Network
-0.98 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fairfax and Postmedia is -0.98. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Postmedia Network Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Postmedia Network Canada 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 Postmedia Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Postmedia Network Canada has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Postmedia Network go up and down completely randomly.
Pair Corralation between Fairfax Financial and Postmedia Network
Assuming the 90 days trading horizon Fairfax Financial Holdings is expected to generate 0.93 times more return on investment than Postmedia Network. However, Fairfax Financial Holdings is 1.07 times less risky than Postmedia Network. It trades about 0.37 of its potential returns per unit of risk. Postmedia Network Canada is currently generating about -0.23 per unit of risk. If you would invest 1,830 in Fairfax Financial Holdings on September 13, 2024 and sell it today you would earn a total of 370.00 from holding Fairfax Financial Holdings or generate 20.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fairfax Financial Holdings vs. Postmedia Network Canada
Performance |
| Timeline |
| Fairfax Financial |
| Postmedia Network Canada |
Fairfax Financial and Postmedia Network Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Postmedia Network
The main advantage of trading using opposite Fairfax Financial and Postmedia Network positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Postmedia Network 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 Postmedia Network will offset losses from the drop in Postmedia Network's long position.| Fairfax Financial vs. Talon Metals Corp | Fairfax Financial vs. Arbor Metals Corp | Fairfax Financial vs. Nicola Mining | Fairfax Financial vs. Data Communications Management |
| Postmedia Network vs. TGS Esports | Postmedia Network vs. Osisko Metals | Postmedia Network vs. Lion One Metals | Postmedia Network vs. iSign Media Solutions |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |