Correlation Between Fairfax Fin and Quebecor

Can any of the company-specific risk be diversified away by investing in both Fairfax Fin and Quebecor 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 Quebecor 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 Quebecor, you can compare the effects of market volatilities on Fairfax Fin and Quebecor 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 Quebecor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Fin and Quebecor.

Diversification Opportunities for Fairfax Fin and Quebecor

-0.68

Correlation Coefficient

Fairfax Fin  Quebecor

Excellent diversification

The 3 months correlation between Fairfax and Quebecor is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Fin Hld and Quebecor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quebecor 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 Quebecor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quebecor has no effect on the direction of Fairfax Fin i.e., Fairfax Fin and Quebecor go up and down completely randomly.

Pair Corralation between Fairfax Fin and Quebecor

Assuming the 90 days trading horizon Fairfax Fin Hld is expected to generate 0.34 times more return on investment than Quebecor. However, Fairfax Fin Hld is 2.98 times less risky than Quebecor. It trades about 0.26 of its potential returns per unit of risk. Quebecor is currently generating about -0.06 per unit of risk. If you would invest  2,158  in Fairfax Fin Hld on September 27, 2024 and sell it today you would earn a total of  342.00  from holding Fairfax Fin Hld or generate 15.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Fairfax Fin Hld  vs.  Quebecor

Fairfax Fin Hld

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fairfax Fin Hld are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical indicators, Fairfax Fin sustained solid returns over the last few months and may actually be approaching a breakup point.

Quebecor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quebecor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Fairfax Fin and Quebecor

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

The idea behind Fairfax Fin Hld and Quebecor 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.