Correlation Between Western Copper and Fairfax Financial
Can any of the company-specific risk be diversified away by investing in both Western Copper 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 Western Copper and Fairfax Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Copper and and Fairfax Financial Holdings, you can compare the effects of market volatilities on Western Copper 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 Western Copper with a short position of Fairfax Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Copper and Fairfax Financial.
Diversification Opportunities for Western Copper and Fairfax Financial
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Fairfax is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and Fairfax Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairfax Financial and Western Copper 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 Western Copper and 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 Western Copper i.e., Western Copper and Fairfax Financial go up and down completely randomly.
Pair Corralation between Western Copper and Fairfax Financial
Assuming the 90 days trading horizon Western Copper and is expected to under-perform the Fairfax Financial. In addition to that, Western Copper is 2.18 times more volatile than Fairfax Financial Holdings. It trades about -0.01 of its total potential returns per unit of risk. Fairfax Financial Holdings is currently generating about 0.13 per unit of volatility. If you would invest 1,789 in Fairfax Financial Holdings on September 3, 2024 and sell it today you would earn a total of 371.00 from holding Fairfax Financial Holdings or generate 20.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Copper and vs. Fairfax Financial Holdings
Performance |
| Timeline |
| Western Copper |
| Fairfax Financial |
Western Copper and Fairfax Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Copper and Fairfax Financial
The main advantage of trading using opposite Western Copper and Fairfax Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Copper 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.| Western Copper vs. Algoma Steel Group | Western Copper vs. Champion Iron | Western Copper vs. International Zeolite Corp | Western Copper vs. European Residential Real |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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