Correlation Between Fairfax Financial and IShares Canadian
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and IShares Canadian 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 IShares Canadian 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 iShares Canadian HYBrid, you can compare the effects of market volatilities on Fairfax Financial and IShares Canadian 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 IShares Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and IShares Canadian.
Diversification Opportunities for Fairfax Financial and IShares Canadian
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Fairfax and IShares is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and iShares Canadian HYBrid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Canadian HYBrid 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 IShares Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Canadian HYBrid has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and IShares Canadian go up and down completely randomly.
Pair Corralation between Fairfax Financial and IShares Canadian
Assuming the 90 days trading horizon Fairfax Financial Holdings is expected to generate 8.4 times more return on investment than IShares Canadian. However, Fairfax Financial is 8.4 times more volatile than iShares Canadian HYBrid. It trades about 0.26 of its potential returns per unit of risk. iShares Canadian HYBrid is currently generating about 0.25 per unit of risk. If you would invest 1,894 in Fairfax Financial Holdings on August 31, 2024 and sell it today you would earn a total of 346.00 from holding Fairfax Financial Holdings or generate 18.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fairfax Financial Holdings vs. iShares Canadian HYBrid
Performance |
| Timeline |
| Fairfax Financial |
| iShares Canadian HYBrid |
Fairfax Financial and IShares Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and IShares Canadian
The main advantage of trading using opposite Fairfax Financial and IShares Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, IShares Canadian 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 IShares Canadian will offset losses from the drop in IShares Canadian's long position.| Fairfax Financial vs. Northstar Clean Technologies | Fairfax Financial vs. Upstart Investments | Fairfax Financial vs. Dream Office Real | Fairfax Financial vs. CNJ Capital Investments |
| IShares Canadian vs. iShares IG Corporate | IShares Canadian vs. iShares High Yield | IShares Canadian vs. iShares Floating Rate | IShares Canadian vs. iShares JP Morgan |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |