Correlation Between Fairfax Financial and Brookfield Renewable
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Brookfield Renewable 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 Brookfield Renewable 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 Brookfield Renewable Partners, you can compare the effects of market volatilities on Fairfax Financial and Brookfield Renewable 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 Brookfield Renewable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Brookfield Renewable.
Diversification Opportunities for Fairfax Financial and Brookfield Renewable
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fairfax and Brookfield is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Brookfield Renewable Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Renewable 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 Brookfield Renewable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Renewable has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Brookfield Renewable go up and down completely randomly.
Pair Corralation between Fairfax Financial and Brookfield Renewable
Assuming the 90 days trading horizon Fairfax Financial Holdings is expected to generate 0.29 times more return on investment than Brookfield Renewable. However, Fairfax Financial Holdings is 3.5 times less risky than Brookfield Renewable. It trades about 0.16 of its potential returns per unit of risk. Brookfield Renewable Partners is currently generating about -0.08 per unit of risk. If you would invest 2,286 in Fairfax Financial Holdings on November 3, 2024 and sell it today you would earn a total of 54.00 from holding Fairfax Financial Holdings or generate 2.36% 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. Brookfield Renewable Partners
Performance |
| Timeline |
| Fairfax Financial |
| Brookfield Renewable |
Fairfax Financial and Brookfield Renewable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Brookfield Renewable
The main advantage of trading using opposite Fairfax Financial and Brookfield Renewable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Brookfield Renewable 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 Brookfield Renewable will offset losses from the drop in Brookfield Renewable's long position.| Fairfax Financial vs. NeXGold Mining Corp | Fairfax Financial vs. Marimaca Copper Corp | Fairfax Financial vs. Titanium Transportation Group | Fairfax Financial vs. Champion Iron |
| Brookfield Renewable vs. Brookfield Infrastructure Partners | Brookfield Renewable vs. Algonquin Power Utilities | Brookfield Renewable vs. Northland Power | Brookfield Renewable vs. Fortis Inc |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |