Correlation Between Fairfax Financial and 2028 Investment

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Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and 2028 Investment 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 2028 Investment 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 2028 Investment Grade, you can compare the effects of market volatilities on Fairfax Financial and 2028 Investment 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 2028 Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and 2028 Investment.

Diversification Opportunities for Fairfax Financial and 2028 Investment

Fairfax2028Diversified AwayFairfax2028Diversified Away100%
-0.22
  Correlation Coefficient

Very good diversification

The 3 months correlation between Fairfax and 2028 is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and 2028 Investment Grade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 2028 Investment Grade 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 2028 Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 2028 Investment Grade has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and 2028 Investment go up and down completely randomly.

Pair Corralation between Fairfax Financial and 2028 Investment

Assuming the 90 days trading horizon Fairfax Financial is expected to generate 1.77 times less return on investment than 2028 Investment. But when comparing it to its historical volatility, Fairfax Financial Holdings is 4.46 times less risky than 2028 Investment. It trades about 0.07 of its potential returns per unit of risk. 2028 Investment Grade is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,045  in 2028 Investment Grade on November 22, 2024 and sell it today you would earn a total of  20.00  from holding 2028 Investment Grade or generate 1.91% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Fairfax Financial Holdings  vs.  2028 Investment Grade

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-100102030
JavaScript chart by amCharts 3.21.15FFH-PF IGBT-UN
       Timeline  
Fairfax Financial 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Fairfax Financial Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical indicators, Fairfax Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2020.52121.52222.523
2028 Investment Grade 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in 2028 Investment Grade are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, 2028 Investment may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb88.599.51010.5

Fairfax Financial and 2028 Investment Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.86-4.39-2.92-1.450.01.63.224.856.47 0.020.040.060.080.10
JavaScript chart by amCharts 3.21.15FFH-PF IGBT-UN
       Returns  

Pair Trading with Fairfax Financial and 2028 Investment

The main advantage of trading using opposite Fairfax Financial and 2028 Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, 2028 Investment 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 2028 Investment will offset losses from the drop in 2028 Investment's long position.
The idea behind Fairfax Financial Holdings and 2028 Investment Grade 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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