Correlation Between Fairfax Financial and Infinico Metals
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Infinico Metals 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 Infinico Metals 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 Infinico Metals Corp, you can compare the effects of market volatilities on Fairfax Financial and Infinico Metals 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 Infinico Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Infinico Metals.
Diversification Opportunities for Fairfax Financial and Infinico Metals
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fairfax and Infinico is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Infinico Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infinico Metals Corp 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 Infinico Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infinico Metals Corp has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Infinico Metals go up and down completely randomly.
Pair Corralation between Fairfax Financial and Infinico Metals
Assuming the 90 days trading horizon Fairfax Financial Holdings is expected to generate 0.13 times more return on investment than Infinico Metals. However, Fairfax Financial Holdings is 7.6 times less risky than Infinico Metals. It trades about 0.27 of its potential returns per unit of risk. Infinico Metals Corp is currently generating about -0.17 per unit of risk. If you would invest 2,229 in Fairfax Financial Holdings on August 27, 2024 and sell it today you would earn a total of 156.00 from holding Fairfax Financial Holdings or generate 7.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Fairfax Financial Holdings vs. Infinico Metals Corp
Performance |
| Timeline |
| Fairfax Financial |
| Infinico Metals Corp |
Fairfax Financial and Infinico Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Infinico Metals
The main advantage of trading using opposite Fairfax Financial and Infinico Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Infinico Metals 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 Infinico Metals will offset losses from the drop in Infinico Metals' 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 |
| Infinico Metals vs. First Majestic Silver | Infinico Metals vs. Ivanhoe Energy | Infinico Metals vs. Orezone Gold Corp |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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