Correlation Between Fairfax Financial and Apple
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Apple 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 Apple 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 Apple Inc CDR, you can compare the effects of market volatilities on Fairfax Financial and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Apple.
Diversification Opportunities for Fairfax Financial and Apple
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fairfax and Apple is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Apple Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc CDR has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Apple go up and down completely randomly.
Pair Corralation between Fairfax Financial and Apple
Assuming the 90 days trading horizon Fairfax Financial is expected to generate 6.09 times less return on investment than Apple. But when comparing it to its historical volatility, Fairfax Financial Holdings is 2.3 times less risky than Apple. It trades about 0.24 of its potential returns per unit of risk. Apple Inc CDR is currently generating about 0.64 of returns per unit of risk over similar time horizon. If you would invest 3,290 in Apple Inc CDR on September 12, 2024 and sell it today you would earn a total of 340.00 from holding Apple Inc CDR or generate 10.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Fairfax Financial Holdings vs. Apple Inc CDR
Performance |
| Timeline |
| Fairfax Financial |
| Apple Inc CDR |
Fairfax Financial and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Apple
The main advantage of trading using opposite Fairfax Financial and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| Fairfax Financial vs. TGS Esports | Fairfax Financial vs. Summa Silver Corp | Fairfax Financial vs. Verizon Communications CDR | Fairfax Financial vs. InPlay Oil Corp |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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