Correlation Between Fairfax Financial and INTEL CDR
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and INTEL CDR 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 INTEL CDR 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 INTEL CDR, you can compare the effects of market volatilities on Fairfax Financial and INTEL CDR 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 INTEL CDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and INTEL CDR.
Diversification Opportunities for Fairfax Financial and INTEL CDR
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fairfax and INTEL is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and INTEL CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTEL CDR 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 INTEL CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTEL CDR has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and INTEL CDR go up and down completely randomly.
Pair Corralation between Fairfax Financial and INTEL CDR
Assuming the 90 days trading horizon Fairfax Financial Holdings is expected to generate 0.43 times more return on investment than INTEL CDR. However, Fairfax Financial Holdings is 2.33 times less risky than INTEL CDR. It trades about 0.3 of its potential returns per unit of risk. INTEL CDR is currently generating about 0.12 per unit of risk. If you would invest 2,226 in Fairfax Financial Holdings on September 3, 2024 and sell it today you would earn a total of 174.00 from holding Fairfax Financial Holdings or generate 7.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fairfax Financial Holdings vs. INTEL CDR
Performance |
| Timeline |
| Fairfax Financial |
| INTEL CDR |
Fairfax Financial and INTEL CDR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and INTEL CDR
The main advantage of trading using opposite Fairfax Financial and INTEL CDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, INTEL CDR 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 INTEL CDR will offset losses from the drop in INTEL CDR'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 |
| INTEL CDR vs. National Bank of | INTEL CDR vs. Fairfax Financial Holdings | INTEL CDR vs. IGM Financial | INTEL CDR vs. Royal Bank of |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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