Correlation Between Fairfax Fin and Mirasol Resources
Can any of the company-specific risk be diversified away by investing in both Fairfax Fin and Mirasol Resources 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 Mirasol Resources 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 Mirasol Resources, you can compare the effects of market volatilities on Fairfax Fin and Mirasol Resources 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 Mirasol Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Fin and Mirasol Resources.
Diversification Opportunities for Fairfax Fin and Mirasol Resources
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fairfax and Mirasol is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Fin Hld and Mirasol Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mirasol Resources 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 Mirasol Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mirasol Resources has no effect on the direction of Fairfax Fin i.e., Fairfax Fin and Mirasol Resources go up and down completely randomly.
Pair Corralation between Fairfax Fin and Mirasol Resources
Assuming the 90 days trading horizon Fairfax Fin is expected to generate 1.8 times less return on investment than Mirasol Resources. But when comparing it to its historical volatility, Fairfax Fin Hld is 3.54 times less risky than Mirasol Resources. It trades about 0.23 of its potential returns per unit of risk. Mirasol Resources is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 47.00 in Mirasol Resources on September 11, 2024 and sell it today you would earn a total of 11.00 from holding Mirasol Resources or generate 23.4% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Fairfax Fin Hld vs. Mirasol Resources
Performance |
Timeline |
Fairfax Fin Hld |
Mirasol Resources |
Fairfax Fin and Mirasol Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fairfax Fin and Mirasol Resources
The main advantage of trading using opposite Fairfax Fin and Mirasol Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Fin position performs unexpectedly, Mirasol Resources 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 Mirasol Resources will offset losses from the drop in Mirasol Resources' long position.Fairfax Fin vs. NeXGold Mining Corp | Fairfax Fin vs. American Hotel Income | Fairfax Fin vs. Nicola Mining | Fairfax Fin vs. Tree Island Steel |
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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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