Correlation Between Pfizer and Fairfax Fin
Can any of the company-specific risk be diversified away by investing in both Pfizer and Fairfax Fin 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 Pfizer and Fairfax Fin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc CDR and Fairfax Fin Hld, you can compare the effects of market volatilities on Pfizer and Fairfax Fin 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 Pfizer with a short position of Fairfax Fin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Fairfax Fin.
Diversification Opportunities for Pfizer and Fairfax Fin
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Pfizer and Fairfax is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc CDR and Fairfax Fin Hld in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairfax Fin Hld and Pfizer 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 Pfizer Inc CDR are associated (or correlated) with Fairfax Fin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fairfax Fin Hld has no effect on the direction of Pfizer i.e., Pfizer and Fairfax Fin go up and down completely randomly.
Pair Corralation between Pfizer and Fairfax Fin
Assuming the 90 days trading horizon Pfizer Inc CDR is expected to under-perform the Fairfax Fin. In addition to that, Pfizer is 1.32 times more volatile than Fairfax Fin Hld. It trades about -0.06 of its total potential returns per unit of risk. Fairfax Fin Hld is currently generating about 0.13 per unit of volatility. If you would invest 1,343 in Fairfax Fin Hld on September 12, 2024 and sell it today you would earn a total of 832.00 from holding Fairfax Fin Hld or generate 61.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pfizer Inc CDR vs. Fairfax Fin Hld
Performance |
| Timeline |
| Pfizer Inc CDR |
| Fairfax Fin Hld |
Pfizer and Fairfax Fin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and Fairfax Fin
The main advantage of trading using opposite Pfizer and Fairfax Fin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Fairfax Fin 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 Fin will offset losses from the drop in Fairfax Fin's long position.| Pfizer vs. Fairfax Financial Holdings | Pfizer vs. Bank of Nova | Pfizer vs. Canlan Ice Sports | Pfizer vs. Canso Credit Trust |
| Fairfax Fin vs. Fairfax Financial Holdings | Fairfax Fin vs. Fairfax Financial Holdings | Fairfax Fin vs. Fairfax Financial Holdings | Fairfax Fin vs. Fairfax Financial Holdings |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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