Correlation Between Fairfax Financial and Sirona Biochem
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Sirona Biochem 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 Sirona Biochem 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 Sirona Biochem Corp, you can compare the effects of market volatilities on Fairfax Financial and Sirona Biochem 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 Sirona Biochem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Sirona Biochem.
Diversification Opportunities for Fairfax Financial and Sirona Biochem
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fairfax and Sirona is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Sirona Biochem Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sirona Biochem 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 Sirona Biochem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sirona Biochem Corp has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Sirona Biochem go up and down completely randomly.
Pair Corralation between Fairfax Financial and Sirona Biochem
Assuming the 90 days trading horizon Fairfax Financial is expected to generate 1.29 times less return on investment than Sirona Biochem. But when comparing it to its historical volatility, Fairfax Financial Holdings is 6.52 times less risky than Sirona Biochem. It trades about 0.12 of its potential returns per unit of risk. Sirona Biochem Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 12.00 in Sirona Biochem Corp on September 12, 2024 and sell it today you would lose (6.50) from holding Sirona Biochem Corp or give up 54.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fairfax Financial Holdings vs. Sirona Biochem Corp
Performance |
| Timeline |
| Fairfax Financial |
| Sirona Biochem Corp |
Fairfax Financial and Sirona Biochem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Sirona Biochem
The main advantage of trading using opposite Fairfax Financial and Sirona Biochem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Sirona Biochem 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 Sirona Biochem will offset losses from the drop in Sirona Biochem's long position.| Fairfax Financial vs. Intact Financial | Fairfax Financial vs. iA Financial | Fairfax Financial vs. TMX Group Limited | Fairfax Financial vs. Onex Corp |
| Sirona Biochem vs. Premium Income | Sirona Biochem vs. E L Financial Corp | Sirona Biochem vs. Fairfax Financial Holdings | Sirona Biochem vs. Fairfax Fin Hld |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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