Correlation Between Fairfax Financial and Propel Holdings
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Propel Holdings 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 Propel Holdings 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 Propel Holdings, you can compare the effects of market volatilities on Fairfax Financial and Propel Holdings 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 Propel Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Propel Holdings.
Diversification Opportunities for Fairfax Financial and Propel Holdings
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fairfax and Propel is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Propel Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Propel Holdings 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 Propel Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Propel Holdings has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Propel Holdings go up and down completely randomly.
Pair Corralation between Fairfax Financial and Propel Holdings
Assuming the 90 days trading horizon Fairfax Financial Holdings is expected to generate 0.1 times more return on investment than Propel Holdings. However, Fairfax Financial Holdings is 10.16 times less risky than Propel Holdings. It trades about 0.24 of its potential returns per unit of risk. Propel Holdings is currently generating about -0.04 per unit of risk. If you would invest 2,461 in Fairfax Financial Holdings on September 12, 2024 and sell it today you would earn a total of 42.00 from holding Fairfax Financial Holdings or generate 1.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fairfax Financial Holdings vs. Propel Holdings
Performance |
| Timeline |
| Fairfax Financial |
| Propel Holdings |
Fairfax Financial and Propel Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Propel Holdings
The main advantage of trading using opposite Fairfax Financial and Propel Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Propel Holdings 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 Propel Holdings will offset losses from the drop in Propel Holdings' 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 |
| Propel Holdings vs. Brompton Lifeco Split | Propel Holdings vs. North American Financial | Propel Holdings vs. Prime Dividend Corp | Propel Holdings vs. Financial 15 Split |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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