Correlation Between Fairfax Financial and GoGold Resources
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and GoGold Resources 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 GoGold Resources 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 GoGold Resources, you can compare the effects of market volatilities on Fairfax Financial and GoGold Resources 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 GoGold Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and GoGold Resources.
Diversification Opportunities for Fairfax Financial and GoGold Resources
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fairfax and GoGold is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and GoGold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoGold Resources 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 GoGold Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoGold Resources has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and GoGold Resources go up and down completely randomly.
Pair Corralation between Fairfax Financial and GoGold Resources
Assuming the 90 days trading horizon Fairfax Financial Holdings is expected to under-perform the GoGold Resources. But the stock apears to be less risky and, when comparing its historical volatility, Fairfax Financial Holdings is 3.45 times less risky than GoGold Resources. The stock trades about -0.05 of its potential returns per unit of risk. The GoGold Resources is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 120.00 in GoGold Resources on November 3, 2024 and sell it today you would earn a total of 34.00 from holding GoGold Resources or generate 28.33% 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. GoGold Resources
Performance |
| Timeline |
| Fairfax Financial |
| GoGold Resources |
Fairfax Financial and GoGold Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and GoGold Resources
The main advantage of trading using opposite Fairfax Financial and GoGold Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, GoGold Resources 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 GoGold Resources will offset losses from the drop in GoGold Resources' long position.| Fairfax Financial vs. Intact Financial | Fairfax Financial vs. iA Financial | Fairfax Financial vs. TMX Group Limited | Fairfax Financial vs. Onex Corp |
| GoGold Resources vs. Defiance Silver Corp | GoGold Resources vs. Liberty Gold Corp | GoGold Resources vs. Dolly Varden Silver | GoGold Resources vs. Minaurum Gold |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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