Correlation Between Fairfax Financial and Maritime Launch
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Maritime Launch 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 Maritime Launch 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 Maritime Launch Services, you can compare the effects of market volatilities on Fairfax Financial and Maritime Launch 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 Maritime Launch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Maritime Launch.
Diversification Opportunities for Fairfax Financial and Maritime Launch
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fairfax and Maritime is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Maritime Launch Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maritime Launch Services 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 Maritime Launch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maritime Launch Services has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Maritime Launch go up and down completely randomly.
Pair Corralation between Fairfax Financial and Maritime Launch
Assuming the 90 days trading horizon Fairfax Financial is expected to generate 1.38 times less return on investment than Maritime Launch. But when comparing it to its historical volatility, Fairfax Financial Holdings is 4.23 times less risky than Maritime Launch. It trades about 0.33 of its potential returns per unit of risk. Maritime Launch Services is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3.50 in Maritime Launch Services on August 31, 2024 and sell it today you would earn a total of 0.50 from holding Maritime Launch Services or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fairfax Financial Holdings vs. Maritime Launch Services
Performance |
| Timeline |
| Fairfax Financial |
| Maritime Launch Services |
Fairfax Financial and Maritime Launch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Maritime Launch
The main advantage of trading using opposite Fairfax Financial and Maritime Launch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Maritime Launch 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 Maritime Launch will offset losses from the drop in Maritime Launch's long position.| Fairfax Financial vs. Fairfax Financial Holdings | Fairfax Financial vs. Fairfax Financial Holdings | Fairfax Financial vs. iShares Canadian HYBrid | Fairfax Financial vs. Brompton European Dividend |
| Maritime Launch vs. Gfl Environmental Holdings | Maritime Launch vs. Renoworks Software | Maritime Launch vs. iSign Media Solutions | Maritime Launch vs. Stampede Drilling |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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