Correlation Between T2 Metals and Fairfax Financial
Can any of the company-specific risk be diversified away by investing in both T2 Metals 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 T2 Metals and Fairfax Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between T2 Metals Corp and Fairfax Financial Holdings, you can compare the effects of market volatilities on T2 Metals 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 T2 Metals with a short position of Fairfax Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of T2 Metals and Fairfax Financial.
Diversification Opportunities for T2 Metals and Fairfax Financial
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TWO and Fairfax is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding T2 Metals Corp and Fairfax Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairfax Financial and T2 Metals 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 T2 Metals Corp 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 T2 Metals i.e., T2 Metals and Fairfax Financial go up and down completely randomly.
Pair Corralation between T2 Metals and Fairfax Financial
Assuming the 90 days horizon T2 Metals Corp is expected to under-perform the Fairfax Financial. In addition to that, T2 Metals is 3.58 times more volatile than Fairfax Financial Holdings. It trades about -0.3 of its total potential returns per unit of risk. Fairfax Financial Holdings is currently generating about 0.41 per unit of volatility. If you would invest 2,245 in Fairfax Financial Holdings on August 31, 2024 and sell it today you would earn a total of 275.00 from holding Fairfax Financial Holdings or generate 12.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
T2 Metals Corp vs. Fairfax Financial Holdings
Performance |
| Timeline |
| T2 Metals Corp |
| Fairfax Financial |
T2 Metals and Fairfax Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T2 Metals and Fairfax Financial
The main advantage of trading using opposite T2 Metals and Fairfax Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T2 Metals 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.| T2 Metals vs. Solar Alliance Energy | T2 Metals vs. Global X Active | T2 Metals vs. Financial 15 Split | T2 Metals vs. Rubicon Organics |
| Fairfax Financial vs. Fairfax Financial Holdings | Fairfax Financial vs. Fairfax Financial Holdings | Fairfax Financial vs. iShares Canadian HYBrid | Fairfax Financial vs. Brompton European Dividend |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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