Correlation Between Fairfax Financial and Ritchie Bros
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Ritchie Bros 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 Ritchie Bros 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 Ritchie Bros Auctioneers, you can compare the effects of market volatilities on Fairfax Financial and Ritchie Bros 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 Ritchie Bros. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Ritchie Bros.
Diversification Opportunities for Fairfax Financial and Ritchie Bros
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fairfax and Ritchie is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Ritchie Bros Auctioneers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ritchie Bros Auctioneers 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 Ritchie Bros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ritchie Bros Auctioneers has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Ritchie Bros go up and down completely randomly.
Pair Corralation between Fairfax Financial and Ritchie Bros
Assuming the 90 days trading horizon Fairfax Financial is expected to generate 1.47 times less return on investment than Ritchie Bros. In addition to that, Fairfax Financial is 1.06 times more volatile than Ritchie Bros Auctioneers. It trades about 0.17 of its total potential returns per unit of risk. Ritchie Bros Auctioneers is currently generating about 0.26 per unit of volatility. If you would invest 12,918 in Ritchie Bros Auctioneers on November 18, 2024 and sell it today you would earn a total of 725.00 from holding Ritchie Bros Auctioneers or generate 5.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fairfax Financial Holdings vs. Ritchie Bros Auctioneers
Performance |
| Timeline |
| Fairfax Financial |
| Ritchie Bros Auctioneers |
Fairfax Financial and Ritchie Bros Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Ritchie Bros
The main advantage of trading using opposite Fairfax Financial and Ritchie Bros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Ritchie Bros 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 Ritchie Bros will offset losses from the drop in Ritchie Bros' long position.| Fairfax Financial vs. Intact Financial | Fairfax Financial vs. iA Financial | Fairfax Financial vs. TMX Group Limited | Fairfax Financial vs. Onex Corp |
| Ritchie Bros vs. Toromont Industries | Ritchie Bros vs. Stantec | Ritchie Bros vs. Finning International | Ritchie Bros vs. FirstService Corp |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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