Correlation Between Goodfood Market and Fairfax Financial
Can any of the company-specific risk be diversified away by investing in both Goodfood Market and Fairfax Financial 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 Goodfood Market and Fairfax Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goodfood Market Corp and Fairfax Financial Holdings, you can compare the effects of market volatilities on Goodfood Market and Fairfax Financial 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 Goodfood Market with a short position of Fairfax Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodfood Market and Fairfax Financial.
Diversification Opportunities for Goodfood Market and Fairfax Financial
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Goodfood and Fairfax is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Goodfood Market Corp and Fairfax Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairfax Financial and Goodfood Market 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 Goodfood Market Corp are associated (or correlated) with Fairfax Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fairfax Financial has no effect on the direction of Goodfood Market i.e., Goodfood Market and Fairfax Financial go up and down completely randomly.
Pair Corralation between Goodfood Market and Fairfax Financial
Assuming the 90 days trading horizon Goodfood Market Corp is expected to under-perform the Fairfax Financial. In addition to that, Goodfood Market is 2.63 times more volatile than Fairfax Financial Holdings. It trades about -0.02 of its total potential returns per unit of risk. Fairfax Financial Holdings is currently generating about 0.14 per unit of volatility. If you would invest 2,109 in Fairfax Financial Holdings on September 23, 2024 and sell it today you would earn a total of 81.00 from holding Fairfax Financial Holdings or generate 3.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goodfood Market Corp vs. Fairfax Financial Holdings
Performance |
| Timeline |
| Goodfood Market Corp |
| Fairfax Financial |
Goodfood Market and Fairfax Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goodfood Market and Fairfax Financial
The main advantage of trading using opposite Goodfood Market and Fairfax Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goodfood Market position performs unexpectedly, Fairfax Financial 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 Fairfax Financial will offset losses from the drop in Fairfax Financial's long position.| Goodfood Market vs. WELL Health Technologies | Goodfood Market vs. Lightspeed Commerce | Goodfood Market vs. Docebo Inc | Goodfood Market vs. Dye Durham |
| Fairfax Financial vs. Identillect Technologies Corp | Fairfax Financial vs. Goodfood Market Corp | Fairfax Financial vs. Bragg Gaming Group | Fairfax Financial vs. Champion Gaming Group |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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