Correlation Between Fairfax Fin and Tidewater Renewables
Can any of the company-specific risk be diversified away by investing in both Fairfax Fin and Tidewater Renewables 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 Tidewater Renewables 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 Tidewater Renewables, you can compare the effects of market volatilities on Fairfax Fin and Tidewater Renewables 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 Tidewater Renewables. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Fin and Tidewater Renewables.
Diversification Opportunities for Fairfax Fin and Tidewater Renewables
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fairfax and Tidewater is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Fin Hld and Tidewater Renewables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidewater Renewables 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 Tidewater Renewables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidewater Renewables has no effect on the direction of Fairfax Fin i.e., Fairfax Fin and Tidewater Renewables go up and down completely randomly.
Pair Corralation between Fairfax Fin and Tidewater Renewables
Assuming the 90 days trading horizon Fairfax Fin Hld is expected to generate 0.15 times more return on investment than Tidewater Renewables. However, Fairfax Fin Hld is 6.53 times less risky than Tidewater Renewables. It trades about 0.23 of its potential returns per unit of risk. Tidewater Renewables is currently generating about -0.24 per unit of risk. If you would invest 2,206 in Fairfax Fin Hld on September 12, 2024 and sell it today you would earn a total of 318.00 from holding Fairfax Fin Hld or generate 14.42% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 98.44% |
Values | Daily Returns |
Fairfax Fin Hld vs. Tidewater Renewables
Performance |
Timeline |
Fairfax Fin Hld |
Tidewater Renewables |
Fairfax Fin and Tidewater Renewables Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fairfax Fin and Tidewater Renewables
The main advantage of trading using opposite Fairfax Fin and Tidewater Renewables positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Fin position performs unexpectedly, Tidewater Renewables 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 Tidewater Renewables will offset losses from the drop in Tidewater Renewables' long position.Fairfax Fin vs. Intact Financial | Fairfax Fin vs. Fairfax Financial Holdings | Fairfax Fin vs. Fairfax Financial Holdings | Fairfax Fin vs. Intact Financial Corp |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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