Correlation Between Fairfax Financial and Molson Coors
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Molson Coors 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 Molson Coors 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 Molson Coors Canada, you can compare the effects of market volatilities on Fairfax Financial and Molson Coors 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 Molson Coors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Molson Coors.
Diversification Opportunities for Fairfax Financial and Molson Coors
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fairfax and Molson is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Molson Coors Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molson Coors 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 Molson Coors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molson Coors Canada has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Molson Coors go up and down completely randomly.
Pair Corralation between Fairfax Financial and Molson Coors
Assuming the 90 days trading horizon Fairfax Financial Holdings is expected to generate 1.22 times more return on investment than Molson Coors. However, Fairfax Financial is 1.22 times more volatile than Molson Coors Canada. It trades about 0.3 of its potential returns per unit of risk. Molson Coors Canada is currently generating about 0.23 per unit of risk. If you would invest 1,851 in Fairfax Financial Holdings on August 27, 2024 and sell it today you would earn a total of 279.00 from holding Fairfax Financial Holdings or generate 15.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 85.71% |
| Values | Daily Returns |
Fairfax Financial Holdings vs. Molson Coors Canada
Performance |
| Timeline |
| Fairfax Financial |
| Molson Coors Canada |
Fairfax Financial and Molson Coors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Molson Coors
The main advantage of trading using opposite Fairfax Financial and Molson Coors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Molson Coors 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 Molson Coors will offset losses from the drop in Molson Coors' long position.| Fairfax Financial vs. Forstrong Global Income | Fairfax Financial vs. BMO Aggregate Bond | Fairfax Financial vs. Terreno Resources Corp | Fairfax Financial vs. iShares Canadian HYBrid |
| Molson Coors vs. Maple Leaf Foods | Molson Coors vs. Saputo Inc | Molson Coors vs. Quebecor | Molson Coors vs. Lassonde Industries |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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