Correlation Between Fairfax Financial and Jericho Oil
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Jericho Oil 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 Jericho Oil 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 Jericho Oil Corp, you can compare the effects of market volatilities on Fairfax Financial and Jericho Oil 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 Jericho Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Jericho Oil.
Diversification Opportunities for Fairfax Financial and Jericho Oil
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fairfax and Jericho is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Jericho Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jericho Oil 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 Jericho Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jericho Oil Corp has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Jericho Oil go up and down completely randomly.
Pair Corralation between Fairfax Financial and Jericho Oil
Assuming the 90 days trading horizon Fairfax Financial Holdings is expected to generate 0.36 times more return on investment than Jericho Oil. However, Fairfax Financial Holdings is 2.79 times less risky than Jericho Oil. It trades about 0.19 of its potential returns per unit of risk. Jericho Oil Corp is currently generating about 0.0 per unit of risk. If you would invest 163,325 in Fairfax Financial Holdings on August 31, 2024 and sell it today you would earn a total of 34,063 from holding Fairfax Financial Holdings or generate 20.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fairfax Financial Holdings vs. Jericho Oil Corp
Performance |
| Timeline |
| Fairfax Financial |
| Jericho Oil Corp |
Fairfax Financial and Jericho Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Jericho Oil
The main advantage of trading using opposite Fairfax Financial and Jericho Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Jericho Oil 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 Jericho Oil will offset losses from the drop in Jericho Oil's long position.| Fairfax Financial vs. Intact Financial | Fairfax Financial vs. iA Financial | Fairfax Financial vs. TMX Group Limited | Fairfax Financial vs. Onex Corp |
| Jericho Oil vs. Gen III Oil | Jericho Oil vs. Desert Mountain Energy | Jericho Oil vs. Jericho Oil Corp | Jericho Oil vs. Ngx Energy International |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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