Correlation Between Fairfax Financial and Storage Vault
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Storage Vault 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 Storage Vault 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 Storage Vault Canada, you can compare the effects of market volatilities on Fairfax Financial and Storage Vault 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 Storage Vault. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Storage Vault.
Diversification Opportunities for Fairfax Financial and Storage Vault
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fairfax and Storage is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Storage Vault Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Storage Vault Canada 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 Storage Vault. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Storage Vault Canada has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Storage Vault go up and down completely randomly.
Pair Corralation between Fairfax Financial and Storage Vault
Assuming the 90 days trading horizon Fairfax Financial Holdings is expected to generate 0.87 times more return on investment than Storage Vault. However, Fairfax Financial Holdings is 1.16 times less risky than Storage Vault. It trades about 0.13 of its potential returns per unit of risk. Storage Vault Canada is currently generating about -0.04 per unit of risk. If you would invest 75,625 in Fairfax Financial Holdings on August 26, 2024 and sell it today you would earn a total of 121,376 from holding Fairfax Financial Holdings or generate 160.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fairfax Financial Holdings vs. Storage Vault Canada
Performance |
| Timeline |
| Fairfax Financial |
| Storage Vault Canada |
Fairfax Financial and Storage Vault Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Storage Vault
The main advantage of trading using opposite Fairfax Financial and Storage Vault positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Storage Vault 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 Storage Vault will offset losses from the drop in Storage Vault's long position.| Fairfax Financial vs. Intact Financial | Fairfax Financial vs. iA Financial | Fairfax Financial vs. TMX Group Limited | Fairfax Financial vs. Onex Corp |
| Storage Vault vs. BSR Real Estate | Storage Vault vs. Nexus Real Estate | Storage Vault vs. European Residential Real | Storage Vault vs. Minto Apartment Real |
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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