Correlation Between Tree Island and Fairfax Financial
Can any of the company-specific risk be diversified away by investing in both Tree Island 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 Tree Island and Fairfax Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tree Island Steel and Fairfax Financial Holdings, you can compare the effects of market volatilities on Tree Island 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 Tree Island with a short position of Fairfax Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tree Island and Fairfax Financial.
Diversification Opportunities for Tree Island and Fairfax Financial
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Tree and Fairfax is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Tree Island Steel and Fairfax Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairfax Financial and Tree Island 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 Tree Island Steel 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 Tree Island i.e., Tree Island and Fairfax Financial go up and down completely randomly.
Pair Corralation between Tree Island and Fairfax Financial
Assuming the 90 days trading horizon Tree Island is expected to generate 16.86 times less return on investment than Fairfax Financial. In addition to that, Tree Island is 2.28 times more volatile than Fairfax Financial Holdings. It trades about 0.0 of its total potential returns per unit of risk. Fairfax Financial Holdings is currently generating about 0.09 per unit of volatility. If you would invest 1,403 in Fairfax Financial Holdings on August 24, 2024 and sell it today you would earn a total of 697.00 from holding Fairfax Financial Holdings or generate 49.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Tree Island Steel vs. Fairfax Financial Holdings
Performance |
| Timeline |
| Tree Island Steel |
| Fairfax Financial |
Tree Island and Fairfax Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tree Island and Fairfax Financial
The main advantage of trading using opposite Tree Island and Fairfax Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tree Island 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.| Tree Island vs. Fairfax Financial Holdings | Tree Island vs. US Financial 15 | Tree Island vs. Aurora Solar Technologies | Tree Island vs. Solar Alliance Energy |
| Fairfax Financial vs. Caribbean Utilities | Fairfax Financial vs. Birchtech Corp | Fairfax Financial vs. Tree Island Steel | Fairfax Financial vs. Rocky Mountain Liquor |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |