Correlation Between Fairfax Financial and Forward Water
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Forward Water 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 Forward Water 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 Forward Water Technologies, you can compare the effects of market volatilities on Fairfax Financial and Forward Water 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 Forward Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Forward Water.
Diversification Opportunities for Fairfax Financial and Forward Water
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fairfax and Forward is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Forward Water Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forward Water Techno 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 Forward Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forward Water Techno has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Forward Water go up and down completely randomly.
Pair Corralation between Fairfax Financial and Forward Water
Assuming the 90 days trading horizon Fairfax Financial Holdings is expected to under-perform the Forward Water. But the preferred stock apears to be less risky and, when comparing its historical volatility, Fairfax Financial Holdings is 24.97 times less risky than Forward Water. The preferred stock trades about -0.02 of its potential returns per unit of risk. The Forward Water Technologies is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 8.00 in Forward Water Technologies on November 2, 2024 and sell it today you would earn a total of 2.00 from holding Forward Water Technologies or generate 25.0% 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. Forward Water Technologies
Performance |
| Timeline |
| Fairfax Financial |
| Forward Water Techno |
Fairfax Financial and Forward Water Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Forward Water
The main advantage of trading using opposite Fairfax Financial and Forward Water positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Forward Water 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 Forward Water will offset losses from the drop in Forward Water's long position.| Fairfax Financial vs. Canaf Investments | Fairfax Financial vs. HPQ Silicon Resources | Fairfax Financial vs. Solid Impact Investments | Fairfax Financial vs. Westshore Terminals Investment |
| Forward Water vs. 2028 Investment Grade | Forward Water vs. Caribbean Utilities | Forward Water vs. Farstarcap Investment Corp | Forward Water vs. Wilmington Capital Management |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |