Correlation Between Globex Mining and Fairfax Financial
Can any of the company-specific risk be diversified away by investing in both Globex Mining 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 Globex Mining and Fairfax Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globex Mining Enterprises and Fairfax Financial Holdings, you can compare the effects of market volatilities on Globex Mining 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 Globex Mining with a short position of Fairfax Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globex Mining and Fairfax Financial.
Diversification Opportunities for Globex Mining and Fairfax Financial
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Globex and Fairfax is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Globex Mining Enterprises and Fairfax Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairfax Financial and Globex Mining 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 Globex Mining Enterprises 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 Globex Mining i.e., Globex Mining and Fairfax Financial go up and down completely randomly.
Pair Corralation between Globex Mining and Fairfax Financial
Assuming the 90 days trading horizon Globex Mining is expected to generate 12.63 times less return on investment than Fairfax Financial. But when comparing it to its historical volatility, Globex Mining Enterprises is 1.16 times less risky than Fairfax Financial. It trades about 0.03 of its potential returns per unit of risk. Fairfax Financial Holdings is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 1,871 in Fairfax Financial Holdings on September 14, 2024 and sell it today you would earn a total of 395.00 from holding Fairfax Financial Holdings or generate 21.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globex Mining Enterprises vs. Fairfax Financial Holdings
Performance |
| Timeline |
| Globex Mining Enterprises |
| Fairfax Financial |
Globex Mining and Fairfax Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globex Mining and Fairfax Financial
The main advantage of trading using opposite Globex Mining and Fairfax Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globex Mining 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.| Globex Mining vs. Foraco International SA | Globex Mining vs. Geodrill Limited | Globex Mining vs. Major Drilling Group | Globex Mining vs. Bri Chem Corp |
| Fairfax Financial vs. Globex Mining Enterprises | Fairfax Financial vs. Arbor Metals Corp | Fairfax Financial vs. MAG Silver Corp | Fairfax Financial vs. Metalero Mining 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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