Correlation Between Fairfax Financial and Bird Construction
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Bird Construction 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 Bird Construction 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 Bird Construction, you can compare the effects of market volatilities on Fairfax Financial and Bird Construction 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 Bird Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Bird Construction.
Diversification Opportunities for Fairfax Financial and Bird Construction
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fairfax and Bird is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Bird Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bird Construction 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 Bird Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bird Construction has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Bird Construction go up and down completely randomly.
Pair Corralation between Fairfax Financial and Bird Construction
Assuming the 90 days trading horizon Fairfax Financial Holdings is expected to generate 0.36 times more return on investment than Bird Construction. However, Fairfax Financial Holdings is 2.8 times less risky than Bird Construction. It trades about 0.12 of its potential returns per unit of risk. Bird Construction is currently generating about -0.22 per unit of risk. If you would invest 2,400 in Fairfax Financial Holdings on October 7, 2024 and sell it today you would earn a total of 40.00 from holding Fairfax Financial Holdings or generate 1.67% 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. Bird Construction
Performance |
| Timeline |
| Fairfax Financial |
| Bird Construction |
Fairfax Financial and Bird Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Bird Construction
The main advantage of trading using opposite Fairfax Financial and Bird Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Bird Construction 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 Bird Construction will offset losses from the drop in Bird Construction's long position.| Fairfax Financial vs. Fairfax Financial Holdings | Fairfax Financial vs. Fairfax Financial Holdings | Fairfax Financial vs. Fairfax Financial Holdings | Fairfax Financial vs. Fairfax Financial Holdings |
| Bird Construction vs. Aecon Group | Bird Construction vs. Mullen Group | Bird Construction vs. Wajax | Bird Construction vs. Exchange Income |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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