Correlation Between Fairfax Financial and Steppe Gold
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Steppe Gold 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 Steppe Gold 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 Steppe Gold, you can compare the effects of market volatilities on Fairfax Financial and Steppe Gold 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 Steppe Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Steppe Gold.
Diversification Opportunities for Fairfax Financial and Steppe Gold
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fairfax and Steppe is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Steppe Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steppe Gold 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 Steppe Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steppe Gold has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Steppe Gold go up and down completely randomly.
Pair Corralation between Fairfax Financial and Steppe Gold
Assuming the 90 days trading horizon Fairfax Financial Holdings is expected to generate 0.48 times more return on investment than Steppe Gold. However, Fairfax Financial Holdings is 2.1 times less risky than Steppe Gold. It trades about 0.19 of its potential returns per unit of risk. Steppe Gold is currently generating about -0.11 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fairfax Financial Holdings vs. Steppe Gold
Performance |
| Timeline |
| Fairfax Financial |
| Steppe Gold |
Fairfax Financial and Steppe Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Steppe Gold
The main advantage of trading using opposite Fairfax Financial and Steppe Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Steppe Gold 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 Steppe Gold will offset losses from the drop in Steppe Gold's long position.| Fairfax Financial vs. Intact Financial | Fairfax Financial vs. iA Financial | Fairfax Financial vs. TMX Group Limited | Fairfax Financial vs. Onex Corp |
| Steppe Gold vs. Tudor Gold Corp | Steppe Gold vs. Erdene Resource Development | Steppe Gold vs. Troilus Gold Corp | Steppe Gold vs. Liberty Gold 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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