Correlation Between Great-West Lifeco and Fairfax Financial
Can any of the company-specific risk be diversified away by investing in both Great-West Lifeco 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 Great-West Lifeco and Fairfax Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great West Lifeco and Fairfax Financial Holdings, you can compare the effects of market volatilities on Great-West Lifeco 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 Great-West Lifeco with a short position of Fairfax Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great-West Lifeco and Fairfax Financial.
Diversification Opportunities for Great-West Lifeco and Fairfax Financial
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Great-West and Fairfax is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Great West Lifeco and Fairfax Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairfax Financial and Great-West Lifeco 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 Great West Lifeco 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 Great-West Lifeco i.e., Great-West Lifeco and Fairfax Financial go up and down completely randomly.
Pair Corralation between Great-West Lifeco and Fairfax Financial
If you would invest 2,384 in Fairfax Financial Holdings on November 30, 2024 and sell it today you would earn a total of 98.00 from holding Fairfax Financial Holdings or generate 4.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Great West Lifeco vs. Fairfax Financial Holdings
Performance |
| Timeline |
| Great West Lifeco |
Risk-Adjusted Performance
Good
Weak | Strong |
| Fairfax Financial |
Great-West Lifeco and Fairfax Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great-West Lifeco and Fairfax Financial
The main advantage of trading using opposite Great-West Lifeco and Fairfax Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great-West Lifeco 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.| Great-West Lifeco vs. Toronto Dominion Bank Pref | Great-West Lifeco vs. Canaf Investments | Great-West Lifeco vs. Upstart Investments | Great-West Lifeco vs. Atrium Mortgage Investment |
| Fairfax Financial vs. Solution Financial | Fairfax Financial vs. CVW CleanTech | Fairfax Financial vs. Farstarcap Investment Corp | Fairfax Financial vs. Definity Financial 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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