Correlation Between Fairfax Financial and Fairfax Financial
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Fairfax Financial 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 Fairfax Financial 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 Fairfax Financial Holdings, you can compare the effects of market volatilities on Fairfax Financial and Fairfax Financial 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 Fairfax Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Fairfax Financial.
Diversification Opportunities for Fairfax Financial and Fairfax Financial
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fairfax and Fairfax is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Fairfax Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairfax Financial 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 Fairfax Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fairfax Financial has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Fairfax Financial go up and down completely randomly.
Pair Corralation between Fairfax Financial and Fairfax Financial
Assuming the 90 days trading horizon Fairfax Financial Holdings is expected to generate 5.37 times more return on investment than Fairfax Financial. However, Fairfax Financial is 5.37 times more volatile than Fairfax Financial Holdings. It trades about 0.31 of its potential returns per unit of risk. Fairfax Financial Holdings is currently generating about 0.39 per unit of risk. If you would invest 1,930 in Fairfax Financial Holdings on August 27, 2024 and sell it today you would earn a total of 315.00 from holding Fairfax Financial Holdings or generate 16.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fairfax Financial Holdings vs. Fairfax Financial Holdings
Performance |
| Timeline |
| Fairfax Financial |
| Fairfax Financial |
Fairfax Financial and Fairfax Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Fairfax Financial
The main advantage of trading using opposite Fairfax Financial and Fairfax Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Fairfax Financial 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 Fairfax Financial will offset losses from the drop in Fairfax Financial's 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 |
| Fairfax Financial vs. Forstrong Global Income | Fairfax Financial vs. BMO Aggregate Bond | Fairfax Financial vs. Terreno Resources Corp | Fairfax Financial vs. iShares Canadian HYBrid |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |