Correlation Between Fairfax Financial and Stingray
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Stingray 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 Stingray 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 Stingray Group, you can compare the effects of market volatilities on Fairfax Financial and Stingray 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 Stingray. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Stingray.
Diversification Opportunities for Fairfax Financial and Stingray
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fairfax and Stingray is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Stingray Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stingray Group 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 Stingray. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stingray Group has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Stingray go up and down completely randomly.
Pair Corralation between Fairfax Financial and Stingray
Assuming the 90 days trading horizon Fairfax Financial Holdings is expected to generate 0.96 times more return on investment than Stingray. However, Fairfax Financial Holdings is 1.04 times less risky than Stingray. It trades about 0.09 of its potential returns per unit of risk. Stingray Group is currently generating about -0.38 per unit of risk. If you would invest 2,227 in Fairfax Financial Holdings on September 25, 2024 and sell it today you would earn a total of 33.00 from holding Fairfax Financial Holdings or generate 1.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Fairfax Financial Holdings vs. Stingray Group
Performance |
| Timeline |
| Fairfax Financial |
| Stingray Group |
Fairfax Financial and Stingray Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Stingray
The main advantage of trading using opposite Fairfax Financial and Stingray positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Stingray 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 Stingray will offset losses from the drop in Stingray's long position.| Fairfax Financial vs. IGM Financial | Fairfax Financial vs. Bank of Nova | Fairfax Financial vs. Data Communications Management | Fairfax Financial vs. North American Financial |
| Stingray vs. Premium Income | Stingray vs. E L Financial Corp | Stingray vs. Fairfax Financial Holdings | Stingray vs. Fairfax Financial Holdings |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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