Correlation Between Fairfax Financial and Ocumetics Technology
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Ocumetics 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 Ocumetics 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 Ocumetics Technology Corp, you can compare the effects of market volatilities on Fairfax Financial and Ocumetics 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 Ocumetics Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Ocumetics Technology.
Diversification Opportunities for Fairfax Financial and Ocumetics Technology
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fairfax and Ocumetics is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Ocumetics Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocumetics Technology 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 Ocumetics Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocumetics Technology Corp has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Ocumetics Technology go up and down completely randomly.
Pair Corralation between Fairfax Financial and Ocumetics Technology
Assuming the 90 days trading horizon Fairfax Financial Holdings is expected to generate 0.53 times more return on investment than Ocumetics Technology. However, Fairfax Financial Holdings is 1.89 times less risky than Ocumetics Technology. It trades about 0.19 of its potential returns per unit of risk. Ocumetics Technology Corp is currently generating about -0.05 per unit of risk. If you would invest 176,040 in Fairfax Financial Holdings on September 13, 2024 and sell it today you would earn a total of 24,787 from holding Fairfax Financial Holdings or generate 14.08% 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. Ocumetics Technology Corp
Performance |
| Timeline |
| Fairfax Financial |
| Ocumetics Technology Corp |
Fairfax Financial and Ocumetics Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Ocumetics Technology
The main advantage of trading using opposite Fairfax Financial and Ocumetics Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Ocumetics 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 Ocumetics Technology will offset losses from the drop in Ocumetics 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 |
| Ocumetics Technology vs. Sirona Biochem Corp | Ocumetics Technology vs. Rakovina Therapeutics | Ocumetics Technology vs. Water Ways Technologies | Ocumetics Technology vs. Perimeter Medical Imaging |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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