Correlation Between Canlan Ice and Fairfax Fin
Can any of the company-specific risk be diversified away by investing in both Canlan Ice and Fairfax Fin 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 Canlan Ice and Fairfax Fin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canlan Ice Sports and Fairfax Fin Hld, you can compare the effects of market volatilities on Canlan Ice and Fairfax Fin 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 Canlan Ice with a short position of Fairfax Fin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canlan Ice and Fairfax Fin.
Diversification Opportunities for Canlan Ice and Fairfax Fin
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Canlan and Fairfax is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Canlan Ice Sports and Fairfax Fin Hld in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairfax Fin Hld and Canlan Ice 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 Canlan Ice Sports are associated (or correlated) with Fairfax Fin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fairfax Fin Hld has no effect on the direction of Canlan Ice i.e., Canlan Ice and Fairfax Fin go up and down completely randomly.
Pair Corralation between Canlan Ice and Fairfax Fin
Assuming the 90 days trading horizon Canlan Ice is expected to generate 2.94 times less return on investment than Fairfax Fin. In addition to that, Canlan Ice is 2.42 times more volatile than Fairfax Fin Hld. It trades about 0.02 of its total potential returns per unit of risk. Fairfax Fin Hld is currently generating about 0.14 per unit of volatility. If you would invest 1,642 in Fairfax Fin Hld on September 2, 2024 and sell it today you would earn a total of 879.00 from holding Fairfax Fin Hld or generate 53.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canlan Ice Sports vs. Fairfax Fin Hld
Performance |
| Timeline |
| Canlan Ice Sports |
| Fairfax Fin Hld |
Canlan Ice and Fairfax Fin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canlan Ice and Fairfax Fin
The main advantage of trading using opposite Canlan Ice and Fairfax Fin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canlan Ice position performs unexpectedly, Fairfax Fin 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 Fin will offset losses from the drop in Fairfax Fin's long position.| Canlan Ice vs. BMTC Group | Canlan Ice vs. Caldwell Partners International | Canlan Ice vs. TWC Enterprises | Canlan Ice vs. Madison Pacific Properties |
| Fairfax Fin vs. Intact Financial | Fairfax Fin vs. Fairfax Financial Holdings | Fairfax Fin vs. Fairfax Financial Holdings | Fairfax Fin vs. Intact 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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