Correlation Between Fairfax Financial and Accord Financial
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Accord 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 Accord 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 Accord Financial Corp, you can compare the effects of market volatilities on Fairfax Financial and Accord 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 Accord Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Accord Financial.
Diversification Opportunities for Fairfax Financial and Accord Financial
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fairfax and Accord is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Accord Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accord Financial 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 Accord Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accord Financial Corp has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Accord Financial go up and down completely randomly.
Pair Corralation between Fairfax Financial and Accord Financial
Assuming the 90 days trading horizon Fairfax Financial Holdings is expected to generate 0.57 times more return on investment than Accord Financial. However, Fairfax Financial Holdings is 1.76 times less risky than Accord Financial. It trades about 0.24 of its potential returns per unit of risk. Accord Financial Corp is currently generating about -0.01 per unit of risk. If you would invest 2,450 in Fairfax Financial Holdings on September 3, 2024 and sell it today you would earn a total of 50.00 from holding Fairfax Financial Holdings or generate 2.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fairfax Financial Holdings vs. Accord Financial Corp
Performance |
| Timeline |
| Fairfax Financial |
| Accord Financial Corp |
Fairfax Financial and Accord Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Accord Financial
The main advantage of trading using opposite Fairfax Financial and Accord Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Accord 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 Accord Financial will offset losses from the drop in Accord Financial's long position.| Fairfax Financial vs. Canadian Utilities Limited | Fairfax Financial vs. Arbor Metals Corp | Fairfax Financial vs. Partners Value Investments | Fairfax Financial vs. Economic Investment Trust |
| Accord Financial vs. Colliers International Group | Accord Financial vs. Altus Group Limited | Accord Financial vs. Harvest Global REIT | Accord Financial vs. International Zeolite 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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