Correlation Between Fairfax Financial and Plaza Retail
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Plaza Retail 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 Plaza Retail 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 Plaza Retail REIT, you can compare the effects of market volatilities on Fairfax Financial and Plaza Retail 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 Plaza Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Plaza Retail.
Diversification Opportunities for Fairfax Financial and Plaza Retail
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fairfax and Plaza is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Plaza Retail REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plaza Retail REIT 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 Plaza Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plaza Retail REIT has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Plaza Retail go up and down completely randomly.
Pair Corralation between Fairfax Financial and Plaza Retail
Assuming the 90 days trading horizon Fairfax Financial Holdings is expected to generate 2.46 times more return on investment than Plaza Retail. However, Fairfax Financial is 2.46 times more volatile than Plaza Retail REIT. It trades about 0.29 of its potential returns per unit of risk. Plaza Retail REIT is currently generating about 0.0 per unit of risk. If you would invest 2,225 in Fairfax Financial Holdings on September 1, 2024 and sell it today you would earn a total of 175.00 from holding Fairfax Financial Holdings or generate 7.87% 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. Plaza Retail REIT
Performance |
| Timeline |
| Fairfax Financial |
| Plaza Retail REIT |
Fairfax Financial and Plaza Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Plaza Retail
The main advantage of trading using opposite Fairfax Financial and Plaza Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Plaza Retail 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 Plaza Retail will offset losses from the drop in Plaza Retail's long position.| Fairfax Financial vs. Upstart Investments | Fairfax Financial vs. Faction Investment Group | Fairfax Financial vs. TUT Fitness Group | Fairfax Financial vs. Leveljump Healthcare Corp |
| Plaza Retail vs. Slate Office REIT | Plaza Retail vs. Automotive Properties Real | Plaza Retail vs. BTB Real Estate | Plaza Retail vs. CT Real Estate |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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