Correlation Between Fairfax Financial and Mammoth Resources
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Mammoth Resources 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 Mammoth Resources 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 Mammoth Resources Corp, you can compare the effects of market volatilities on Fairfax Financial and Mammoth Resources 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 Mammoth Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Mammoth Resources.
Diversification Opportunities for Fairfax Financial and Mammoth Resources
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fairfax and Mammoth is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Mammoth Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mammoth Resources 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 Mammoth Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mammoth Resources Corp has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Mammoth Resources go up and down completely randomly.
Pair Corralation between Fairfax Financial and Mammoth Resources
Assuming the 90 days trading horizon Fairfax Financial is expected to generate 10.78 times less return on investment than Mammoth Resources. But when comparing it to its historical volatility, Fairfax Financial Holdings is 15.15 times less risky than Mammoth Resources. It trades about 0.09 of its potential returns per unit of risk. Mammoth Resources Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3.00 in Mammoth Resources Corp on September 13, 2024 and sell it today you would lose (0.50) from holding Mammoth Resources Corp or give up 16.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fairfax Financial Holdings vs. Mammoth Resources Corp
Performance |
| Timeline |
| Fairfax Financial |
| Mammoth Resources Corp |
Fairfax Financial and Mammoth Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Mammoth Resources
The main advantage of trading using opposite Fairfax Financial and Mammoth Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Mammoth Resources 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 Mammoth Resources will offset losses from the drop in Mammoth Resources' 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 |
| Mammoth Resources vs. Income Financial Trust | Mammoth Resources vs. Fairfax Financial Holdings | Mammoth Resources vs. Western Investment | Mammoth Resources vs. CI Financial 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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