Correlation Between Fairfax Financial and Firan Technology
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Firan Technology 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 Firan Technology 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 Firan Technology Group, you can compare the effects of market volatilities on Fairfax Financial and Firan Technology 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 Firan Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Firan Technology.
Diversification Opportunities for Fairfax Financial and Firan Technology
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fairfax and Firan is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Firan Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firan Technology 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 Firan Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firan Technology has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Firan Technology go up and down completely randomly.
Pair Corralation between Fairfax Financial and Firan Technology
Assuming the 90 days trading horizon Fairfax Financial is expected to generate 1.04 times less return on investment than Firan Technology. But when comparing it to its historical volatility, Fairfax Financial Holdings is 1.17 times less risky than Firan Technology. It trades about 0.19 of its potential returns per unit of risk. Firan Technology Group is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 597.00 in Firan Technology Group on September 2, 2024 and sell it today you would earn a total of 133.00 from holding Firan Technology Group or generate 22.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fairfax Financial Holdings vs. Firan Technology Group
Performance |
| Timeline |
| Fairfax Financial |
| Firan Technology |
Fairfax Financial and Firan Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Firan Technology
The main advantage of trading using opposite Fairfax Financial and Firan Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Firan Technology 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 Firan Technology will offset losses from the drop in Firan Technology's long position.| Fairfax Financial vs. Intact Financial | Fairfax Financial vs. iA Financial | Fairfax Financial vs. TMX Group Limited | Fairfax Financial vs. Onex Corp |
| Firan Technology vs. Hammond Power Solutions | Firan Technology vs. Questor Technology | Firan Technology vs. Vecima Networks | Firan Technology vs. Magellan Aerospace |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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