Correlation Between Fairfax Financial and Tucows
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Tucows 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 Tucows 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 Tucows Inc, you can compare the effects of market volatilities on Fairfax Financial and Tucows 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 Tucows. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Tucows.
Diversification Opportunities for Fairfax Financial and Tucows
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fairfax and Tucows is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Tucows Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tucows Inc 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 Tucows. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tucows Inc has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Tucows go up and down completely randomly.
Pair Corralation between Fairfax Financial and Tucows
Assuming the 90 days trading horizon Fairfax Financial Holdings is expected to generate 0.57 times more return on investment than Tucows. However, Fairfax Financial Holdings is 1.75 times less risky than Tucows. It trades about 0.18 of its potential returns per unit of risk. Tucows Inc is currently generating about -0.08 per unit of risk. If you would invest 166,862 in Fairfax Financial Holdings on September 12, 2024 and sell it today you would earn a total of 32,943 from holding Fairfax Financial Holdings or generate 19.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fairfax Financial Holdings vs. Tucows Inc
Performance |
| Timeline |
| Fairfax Financial |
| Tucows Inc |
Fairfax Financial and Tucows Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Tucows
The main advantage of trading using opposite Fairfax Financial and Tucows positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Tucows 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 Tucows will offset losses from the drop in Tucows' long position.| Fairfax Financial vs. Intact Financial | Fairfax Financial vs. iA Financial | Fairfax Financial vs. TMX Group Limited | Fairfax Financial vs. Onex Corp |
| Tucows vs. TECSYS Inc | Tucows vs. Descartes Systems Group | Tucows vs. Enghouse Systems | Tucows vs. Evertz Technologies Limited |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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