Correlation Between Fairfax Financial and Quantum Numbers
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Quantum Numbers 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 Quantum Numbers 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 Quantum Numbers, you can compare the effects of market volatilities on Fairfax Financial and Quantum Numbers 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 Quantum Numbers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Quantum Numbers.
Diversification Opportunities for Fairfax Financial and Quantum Numbers
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fairfax and Quantum is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Quantum Numbers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantum Numbers 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 Quantum Numbers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quantum Numbers has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Quantum Numbers go up and down completely randomly.
Pair Corralation between Fairfax Financial and Quantum Numbers
Assuming the 90 days trading horizon Fairfax Financial is expected to generate 99.93 times less return on investment than Quantum Numbers. But when comparing it to its historical volatility, Fairfax Financial Holdings is 51.71 times less risky than Quantum Numbers. It trades about 0.18 of its potential returns per unit of risk. Quantum Numbers is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 13.00 in Quantum Numbers on September 25, 2024 and sell it today you would earn a total of 54.00 from holding Quantum Numbers or generate 415.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fairfax Financial Holdings vs. Quantum Numbers
Performance |
| Timeline |
| Fairfax Financial |
| Quantum Numbers |
Fairfax Financial and Quantum Numbers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Quantum Numbers
The main advantage of trading using opposite Fairfax Financial and Quantum Numbers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Quantum Numbers 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 Quantum Numbers will offset losses from the drop in Quantum Numbers' long position.| Fairfax Financial vs. Intact Financial | Fairfax Financial vs. iA Financial | Fairfax Financial vs. TMX Group Limited | Fairfax Financial vs. Onex Corp |
| Quantum Numbers vs. Premium Income | Quantum Numbers vs. E L Financial Corp | Quantum Numbers vs. Fairfax Financial Holdings | Quantum Numbers vs. Fairfax Financial Holdings |
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 Correlations module to find global opportunities by holding instruments from different markets.
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