Correlation Between Fairfax Fin and Canaccord Genuity

Can any of the company-specific risk be diversified away by investing in both Fairfax Fin and Canaccord Genuity 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 Fairfax Fin and Canaccord Genuity into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fairfax Fin Hld and Canaccord Genuity Group, you can compare the effects of market volatilities on Fairfax Fin and Canaccord Genuity 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 Fairfax Fin with a short position of Canaccord Genuity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Fin and Canaccord Genuity.

Diversification Opportunities for Fairfax Fin and Canaccord Genuity

0.9

Correlation Coefficient

Fairfax Fin  Canaccord Genuity

Almost no diversification

The 3 months correlation between Fairfax and Canaccord is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Fin Hld and Canaccord Genuity Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canaccord Genuity and Fairfax Fin 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 Fairfax Fin Hld are associated (or correlated) with Canaccord Genuity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canaccord Genuity has no effect on the direction of Fairfax Fin i.e., Fairfax Fin and Canaccord Genuity go up and down completely randomly.

Pair Corralation between Fairfax Fin and Canaccord Genuity

Assuming the 90 days trading horizon Fairfax Fin Hld is expected to generate 0.2 times more return on investment than Canaccord Genuity. However, Fairfax Fin Hld is 5.1 times less risky than Canaccord Genuity. It trades about -0.07 of its potential returns per unit of risk. Canaccord Genuity Group is currently generating about -0.05 per unit of risk. If you would invest  2,508  in Fairfax Fin Hld on September 21, 2024 and sell it today you would lose (12.00) from holding Fairfax Fin Hld or give up 0.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.65%
Values	Daily Returns

Fairfax Fin Hld  vs.  Canaccord Genuity Group

Fairfax Fin Hld

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fairfax Fin Hld are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical indicators, Fairfax Fin sustained solid returns over the last few months and may actually be approaching a breakup point.

Canaccord Genuity

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Canaccord Genuity Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Canaccord Genuity displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fairfax Fin and Canaccord Genuity

The main advantage of trading using opposite Fairfax Fin and Canaccord Genuity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Fin position performs unexpectedly, Canaccord Genuity 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 Canaccord Genuity will offset losses from the drop in Canaccord Genuity's long position.

The idea behind Fairfax Fin Hld and Canaccord Genuity Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.