Correlation Between Fairfax Financial and Vista Gold
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Vista 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 Vista 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 Vista Gold, you can compare the effects of market volatilities on Fairfax Financial and Vista 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 Vista Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Vista Gold.
Diversification Opportunities for Fairfax Financial and Vista Gold
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fairfax and Vista is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Vista Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vista 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 Vista Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vista Gold has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Vista Gold go up and down completely randomly.
Pair Corralation between Fairfax Financial and Vista Gold
Assuming the 90 days trading horizon Fairfax Financial is expected to generate 1.49 times less return on investment than Vista Gold. But when comparing it to its historical volatility, Fairfax Financial Holdings is 4.37 times less risky than Vista Gold. It trades about 0.39 of its potential returns per unit of risk. Vista Gold is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 77.00 in Vista Gold on September 13, 2024 and sell it today you would earn a total of 7.00 from holding Vista Gold or generate 9.09% 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. Vista Gold
Performance |
| Timeline |
| Fairfax Financial |
| Vista Gold |
Fairfax Financial and Vista Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Vista Gold
The main advantage of trading using opposite Fairfax Financial and Vista Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Vista 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 Vista Gold will offset losses from the drop in Vista 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 |
| Vista Gold vs. Trigon Metals | Vista Gold vs. RTG Mining | Vista Gold vs. Seabridge Gold | Vista Gold vs. Fremont Gold |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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