Correlation Between Fairfax Financial and Kraken Robotics
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Kraken Robotics 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 Kraken Robotics 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 Kraken Robotics, you can compare the effects of market volatilities on Fairfax Financial and Kraken Robotics 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 Kraken Robotics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Kraken Robotics.
Diversification Opportunities for Fairfax Financial and Kraken Robotics
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fairfax and Kraken is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Kraken Robotics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kraken Robotics 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 Kraken Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kraken Robotics has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Kraken Robotics go up and down completely randomly.
Pair Corralation between Fairfax Financial and Kraken Robotics
Assuming the 90 days trading horizon Fairfax Financial is expected to generate 1.31 times less return on investment than Kraken Robotics. But when comparing it to its historical volatility, Fairfax Financial Holdings is 2.62 times less risky than Kraken Robotics. It trades about 0.3 of its potential returns per unit of risk. Kraken Robotics is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 200.00 in Kraken Robotics on September 1, 2024 and sell it today you would earn a total of 33.00 from holding Kraken Robotics or generate 16.5% 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. Kraken Robotics
Performance |
| Timeline |
| Fairfax Financial |
| Kraken Robotics |
Fairfax Financial and Kraken Robotics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Kraken Robotics
The main advantage of trading using opposite Fairfax Financial and Kraken Robotics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Kraken Robotics 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 Kraken Robotics will offset losses from the drop in Kraken Robotics' long position.| Fairfax Financial vs. iA Financial | Fairfax Financial vs. CI Financial Corp | Fairfax Financial vs. iShares Canadian HYBrid | Fairfax Financial vs. Altagas Cum Red |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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