Correlation Between MTI WIRELESS and Fairfax Financial
Can any of the company-specific risk be diversified away by investing in both MTI WIRELESS 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 MTI WIRELESS and Fairfax Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MTI WIRELESS EDGE and Fairfax Financial Holdings, you can compare the effects of market volatilities on MTI WIRELESS 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 MTI WIRELESS with a short position of Fairfax Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTI WIRELESS and Fairfax Financial.
Diversification Opportunities for MTI WIRELESS and Fairfax Financial
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MTI and Fairfax is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding MTI WIRELESS EDGE and Fairfax Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairfax Financial and MTI WIRELESS 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 MTI WIRELESS EDGE 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 MTI WIRELESS i.e., MTI WIRELESS and Fairfax Financial go up and down completely randomly.
Pair Corralation between MTI WIRELESS and Fairfax Financial
Assuming the 90 days horizon MTI WIRELESS is expected to generate 2.25 times less return on investment than Fairfax Financial. In addition to that, MTI WIRELESS is 3.15 times more volatile than Fairfax Financial Holdings. It trades about 0.02 of its total potential returns per unit of risk. Fairfax Financial Holdings is currently generating about 0.12 per unit of volatility. If you would invest 53,472 in Fairfax Financial Holdings on September 12, 2024 and sell it today you would earn a total of 80,328 from holding Fairfax Financial Holdings or generate 150.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MTI WIRELESS EDGE vs. Fairfax Financial Holdings
Performance |
| Timeline |
| MTI WIRELESS EDGE |
| Fairfax Financial |
MTI WIRELESS and Fairfax Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MTI WIRELESS and Fairfax Financial
The main advantage of trading using opposite MTI WIRELESS and Fairfax Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTI WIRELESS 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.| MTI WIRELESS vs. Apple Inc | MTI WIRELESS vs. Apple Inc | MTI WIRELESS vs. Apple Inc | MTI WIRELESS vs. Apple Inc |
| Fairfax Financial vs. MTI WIRELESS EDGE | Fairfax Financial vs. Infrastrutture Wireless Italiane | Fairfax Financial vs. Iridium Communications | Fairfax Financial vs. Entravision Communications |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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