Correlation Between Northview Residential and Fairfax Financial
Can any of the company-specific risk be diversified away by investing in both Northview Residential 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 Northview Residential and Fairfax Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northview Residential REIT and Fairfax Financial Holdings, you can compare the effects of market volatilities on Northview Residential 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 Northview Residential with a short position of Fairfax Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northview Residential and Fairfax Financial.
Diversification Opportunities for Northview Residential and Fairfax Financial
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Northview and Fairfax is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Northview Residential REIT and Fairfax Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairfax Financial and Northview Residential 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 Northview Residential REIT 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 Northview Residential i.e., Northview Residential and Fairfax Financial go up and down completely randomly.
Pair Corralation between Northview Residential and Fairfax Financial
Assuming the 90 days trading horizon Northview Residential REIT is expected to under-perform the Fairfax Financial. But the stock apears to be less risky and, when comparing its historical volatility, Northview Residential REIT is 1.44 times less risky than Fairfax Financial. The stock trades about -0.36 of its potential returns per unit of risk. The Fairfax Financial Holdings is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,851 in Fairfax Financial Holdings on August 24, 2024 and sell it today you would earn a total of 249.00 from holding Fairfax Financial Holdings or generate 13.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northview Residential REIT vs. Fairfax Financial Holdings
Performance |
| Timeline |
| Northview Residential |
| Fairfax Financial |
Northview Residential and Fairfax Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northview Residential and Fairfax Financial
The main advantage of trading using opposite Northview Residential and Fairfax Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northview Residential 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.| Northview Residential vs. Income Financial Trust | Northview Residential vs. Canso Credit Trust | Northview Residential vs. MTY Food Group | Northview Residential vs. US Financial 15 |
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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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