Correlation Between Fairfax Financial and Timbercreek Financial
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Timbercreek Financial 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 Timbercreek Financial 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 Timbercreek Financial Corp, you can compare the effects of market volatilities on Fairfax Financial and Timbercreek Financial 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 Timbercreek Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Timbercreek Financial.
Diversification Opportunities for Fairfax Financial and Timbercreek Financial
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fairfax and Timbercreek is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Timbercreek Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timbercreek Financial 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 Timbercreek Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timbercreek Financial has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Timbercreek Financial go up and down completely randomly.
Pair Corralation between Fairfax Financial and Timbercreek Financial
Assuming the 90 days trading horizon Fairfax Financial Holdings is expected to generate 0.69 times more return on investment than Timbercreek Financial. However, Fairfax Financial Holdings is 1.44 times less risky than Timbercreek Financial. It trades about 0.11 of its potential returns per unit of risk. Timbercreek Financial Corp is currently generating about 0.01 per unit of risk. If you would invest 1,645 in Fairfax Financial Holdings on December 1, 2024 and sell it today you would earn a total of 837.00 from holding Fairfax Financial Holdings or generate 50.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fairfax Financial Holdings vs. Timbercreek Financial Corp
Performance |
| Timeline |
| Fairfax Financial |
| Timbercreek Financial |
Fairfax Financial and Timbercreek Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Timbercreek Financial
The main advantage of trading using opposite Fairfax Financial and Timbercreek Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Timbercreek Financial 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 Timbercreek Financial will offset losses from the drop in Timbercreek Financial's long position.| Fairfax Financial vs. Solution Financial | Fairfax Financial vs. CVW CleanTech | Fairfax Financial vs. Farstarcap Investment Corp | Fairfax Financial vs. Definity Financial Corp |
| Timbercreek Financial vs. Atrium Mortgage Investment | Timbercreek Financial vs. MCAN Mortgage | Timbercreek Financial vs. Fiera Capital | Timbercreek Financial vs. Firm Capital Mortgage |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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