Correlation Between Fairfax Financial and Grosvenor Resource

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

By analyzing existing cross correlation between Fairfax Financial Holdings and Grosvenor Resource Corp, you can compare the effects of market volatilities on Fairfax Financial and Grosvenor Resource 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 Financial with a short position of Grosvenor Resource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Grosvenor Resource.

Diversification Opportunities for Fairfax Financial and Grosvenor Resource

0.0

Correlation Coefficient

Fairfax Financial  Grosvenor Resource

Pay attention - limited upside

The 3 months correlation between Fairfax and Grosvenor is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Grosvenor Resource Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grosvenor Resource Corp and Fairfax Financial 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 Financial Holdings are associated (or correlated) with Grosvenor Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grosvenor Resource Corp has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Grosvenor Resource go up and down completely randomly.

Pair Corralation between Fairfax Financial and Grosvenor Resource

If you would invest  1,750  in Fairfax Financial Holdings on September 5, 2024 and sell it today you would earn a total of  505.00  from holding Fairfax Financial Holdings or generate 28.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Fairfax Financial Holdings  vs.  Grosvenor Resource Corp

Fairfax Financial

Risk-Adjusted Performance

17 of 100

Solid

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

Grosvenor Resource Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grosvenor Resource Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Grosvenor Resource is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Fairfax Financial and Grosvenor Resource

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

The idea behind Fairfax Financial Holdings and Grosvenor Resource Corp 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.

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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.