Correlation Between Canlan Ice and Fairfax Financial
Can any of the company-specific risk be diversified away by investing in both Canlan Ice 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 Canlan Ice and Fairfax Financial 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 Financial Holdings, you can compare the effects of market volatilities on Canlan Ice 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 Canlan Ice with a short position of Fairfax Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canlan Ice and Fairfax Financial.
Diversification Opportunities for Canlan Ice and Fairfax Financial
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Canlan and Fairfax is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Canlan Ice Sports and Fairfax Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairfax Financial 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 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 Canlan Ice i.e., Canlan Ice and Fairfax Financial go up and down completely randomly.
Pair Corralation between Canlan Ice and Fairfax Financial
Assuming the 90 days trading horizon Canlan Ice is expected to generate 1.94 times less return on investment than Fairfax Financial. But when comparing it to its historical volatility, Canlan Ice Sports is 1.6 times less risky than Fairfax Financial. It trades about 0.28 of its potential returns per unit of risk. Fairfax Financial Holdings is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 2,274 in Fairfax Financial Holdings on August 29, 2024 and sell it today you would earn a total of 241.00 from holding Fairfax Financial Holdings or generate 10.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Canlan Ice Sports vs. Fairfax Financial Holdings
Performance |
| Timeline |
| Canlan Ice Sports |
| Fairfax Financial |
Canlan Ice and Fairfax Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canlan Ice and Fairfax Financial
The main advantage of trading using opposite Canlan Ice and Fairfax Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canlan Ice 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.| Canlan Ice vs. Eros Resources Corp | Canlan Ice vs. Apple Inc CDR | Canlan Ice vs. European Residential Real | Canlan Ice vs. Canadian Utilities Ltd |
| Fairfax Financial vs. Walmart Inc CDR | Fairfax Financial vs. Amazon CDR | Fairfax Financial vs. Berkshire Hathaway CDR | Fairfax Financial vs. UnitedHealth Group CDR |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |