Correlation Between Fairfax Financial and Silver Grail
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Silver Grail 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 Silver Grail 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 Silver Grail Resources, you can compare the effects of market volatilities on Fairfax Financial and Silver Grail 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 Silver Grail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Silver Grail.
Diversification Opportunities for Fairfax Financial and Silver Grail
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fairfax and Silver is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Silver Grail Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Grail Resources 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 Silver Grail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Grail Resources has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Silver Grail go up and down completely randomly.
Pair Corralation between Fairfax Financial and Silver Grail
Assuming the 90 days trading horizon Fairfax Financial is expected to generate 4.63 times less return on investment than Silver Grail. But when comparing it to its historical volatility, Fairfax Financial Holdings is 9.82 times less risky than Silver Grail. It trades about 0.08 of its potential returns per unit of risk. Silver Grail Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 10.00 in Silver Grail Resources on September 5, 2024 and sell it today you would lose (2.00) from holding Silver Grail Resources or give up 20.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Fairfax Financial Holdings vs. Silver Grail Resources
Performance |
| Timeline |
| Fairfax Financial |
| Silver Grail Resources |
Fairfax Financial and Silver Grail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Silver Grail
The main advantage of trading using opposite Fairfax Financial and Silver Grail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Silver Grail 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 Silver Grail will offset losses from the drop in Silver Grail'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 |
| Silver Grail vs. Everyday People Financial | Silver Grail vs. Canadian Imperial Bank | Silver Grail vs. Fairfax Financial Holdings | Silver Grail vs. US Financial 15 |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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