Correlation Between Fairfax Financial and Newmont Goldcorp
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Newmont Goldcorp 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 Newmont Goldcorp 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 Newmont Goldcorp Corp, you can compare the effects of market volatilities on Fairfax Financial and Newmont Goldcorp 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 Newmont Goldcorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Newmont Goldcorp.
Diversification Opportunities for Fairfax Financial and Newmont Goldcorp
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fairfax and Newmont is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Newmont Goldcorp Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmont Goldcorp 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 Newmont Goldcorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmont Goldcorp Corp has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Newmont Goldcorp go up and down completely randomly.
Pair Corralation between Fairfax Financial and Newmont Goldcorp
Assuming the 90 days trading horizon Fairfax Financial Holdings is expected to generate 0.58 times more return on investment than Newmont Goldcorp. However, Fairfax Financial Holdings is 1.72 times less risky than Newmont Goldcorp. It trades about 0.39 of its potential returns per unit of risk. Newmont Goldcorp Corp is currently generating about 0.12 per unit of risk. If you would invest 187,949 in Fairfax Financial Holdings on September 13, 2024 and sell it today you would earn a total of 12,878 from holding Fairfax Financial Holdings or generate 6.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fairfax Financial Holdings vs. Newmont Goldcorp Corp
Performance |
| Timeline |
| Fairfax Financial |
| Newmont Goldcorp Corp |
Fairfax Financial and Newmont Goldcorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Newmont Goldcorp
The main advantage of trading using opposite Fairfax Financial and Newmont Goldcorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Newmont Goldcorp 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 Newmont Goldcorp will offset losses from the drop in Newmont Goldcorp's long position.| Fairfax Financial vs. Intact Financial | Fairfax Financial vs. iA Financial | Fairfax Financial vs. TMX Group Limited | Fairfax Financial vs. Onex Corp |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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