Correlation Between Jamieson Wellness and Fairfax Financial
Can any of the company-specific risk be diversified away by investing in both Jamieson Wellness 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 Jamieson Wellness and Fairfax Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jamieson Wellness and Fairfax Financial Holdings, you can compare the effects of market volatilities on Jamieson Wellness 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 Jamieson Wellness with a short position of Fairfax Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jamieson Wellness and Fairfax Financial.
Diversification Opportunities for Jamieson Wellness and Fairfax Financial
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Jamieson and Fairfax is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Jamieson Wellness and Fairfax Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairfax Financial and Jamieson Wellness 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 Jamieson Wellness 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 Jamieson Wellness i.e., Jamieson Wellness and Fairfax Financial go up and down completely randomly.
Pair Corralation between Jamieson Wellness and Fairfax Financial
Assuming the 90 days trading horizon Jamieson Wellness is expected to generate 4.1 times less return on investment than Fairfax Financial. But when comparing it to its historical volatility, Jamieson Wellness is 1.54 times less risky than Fairfax Financial. It trades about 0.14 of its potential returns per unit of risk. Fairfax Financial Holdings is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 1,830 in Fairfax Financial Holdings on September 13, 2024 and sell it today you would earn a total of 370.00 from holding Fairfax Financial Holdings or generate 20.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jamieson Wellness vs. Fairfax Financial Holdings
Performance |
| Timeline |
| Jamieson Wellness |
| Fairfax Financial |
Jamieson Wellness and Fairfax Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jamieson Wellness and Fairfax Financial
The main advantage of trading using opposite Jamieson Wellness and Fairfax Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jamieson Wellness 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.| Jamieson Wellness vs. Leons Furniture Limited | Jamieson Wellness vs. Autocanada | Jamieson Wellness vs. Maple Leaf Foods | Jamieson Wellness vs. Premium Brands Holdings |
| Fairfax Financial vs. Talon Metals Corp | Fairfax Financial vs. Arbor Metals Corp | Fairfax Financial vs. Nicola Mining | Fairfax Financial vs. Data Communications Management |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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