Correlation Between Pollard Banknote and Fairfax Financial
Can any of the company-specific risk be diversified away by investing in both Pollard Banknote 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 Pollard Banknote and Fairfax Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pollard Banknote Limited and Fairfax Financial Holdings, you can compare the effects of market volatilities on Pollard Banknote 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 Pollard Banknote with a short position of Fairfax Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pollard Banknote and Fairfax Financial.
Diversification Opportunities for Pollard Banknote and Fairfax Financial
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Pollard and Fairfax is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Pollard Banknote Limited and Fairfax Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairfax Financial and Pollard Banknote 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 Pollard Banknote Limited 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 Pollard Banknote i.e., Pollard Banknote and Fairfax Financial go up and down completely randomly.
Pair Corralation between Pollard Banknote and Fairfax Financial
Assuming the 90 days trading horizon Pollard Banknote is expected to generate 1.16 times less return on investment than Fairfax Financial. In addition to that, Pollard Banknote is 1.99 times more volatile than Fairfax Financial Holdings. It trades about 0.13 of its total potential returns per unit of risk. Fairfax Financial Holdings is currently generating about 0.29 per unit of volatility. If you would invest 2,225 in Fairfax Financial Holdings on September 1, 2024 and sell it today you would earn a total of 175.00 from holding Fairfax Financial Holdings or generate 7.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pollard Banknote Limited vs. Fairfax Financial Holdings
Performance |
| Timeline |
| Pollard Banknote |
| Fairfax Financial |
Pollard Banknote and Fairfax Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pollard Banknote and Fairfax Financial
The main advantage of trading using opposite Pollard Banknote and Fairfax Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pollard Banknote 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.| Pollard Banknote vs. TFI International | Pollard Banknote vs. Baylin Technologies | Pollard Banknote vs. Information Services |
| Fairfax Financial vs. Upstart Investments | Fairfax Financial vs. Faction Investment Group | Fairfax Financial vs. TUT Fitness Group | Fairfax Financial vs. Leveljump Healthcare 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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