Correlation Between Sun Lif and Fairfax Financial
Can any of the company-specific risk be diversified away by investing in both Sun Lif 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 Sun Lif and Fairfax Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sun Lif Non and Fairfax Financial Holdings, you can compare the effects of market volatilities on Sun Lif 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 Sun Lif with a short position of Fairfax Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Lif and Fairfax Financial.
Diversification Opportunities for Sun Lif and Fairfax Financial
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sun and Fairfax is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Sun Lif Non and Fairfax Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairfax Financial and Sun Lif 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 Sun Lif Non 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 Sun Lif i.e., Sun Lif and Fairfax Financial go up and down completely randomly.
Pair Corralation between Sun Lif and Fairfax Financial
Assuming the 90 days trading horizon Sun Lif is expected to generate 19.1 times less return on investment than Fairfax Financial. But when comparing it to its historical volatility, Sun Lif Non is 2.83 times less risky than Fairfax Financial. It trades about 0.04 of its potential returns per unit of risk. Fairfax Financial Holdings is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 173,025 in Fairfax Financial Holdings on September 1, 2024 and sell it today you would earn a total of 25,605 from holding Fairfax Financial Holdings or generate 14.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Lif Non vs. Fairfax Financial Holdings
Performance |
| Timeline |
| Sun Lif Non |
| Fairfax Financial |
Sun Lif and Fairfax Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Lif and Fairfax Financial
The main advantage of trading using opposite Sun Lif and Fairfax Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Lif 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.| Sun Lif vs. A W FOOD | Sun Lif vs. Canlan Ice Sports | Sun Lif vs. HOME DEPOT CDR | Sun Lif vs. Dream Office Real |
| Fairfax Financial vs. iA Financial | Fairfax Financial vs. CI Financial Corp | Fairfax Financial vs. iShares Canadian HYBrid | Fairfax Financial vs. Altagas Cum Red |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |