Correlation Between Fairfax Financial and Marimaca Copper

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

Diversification Opportunities for Fairfax Financial and Marimaca Copper

0.82

Correlation Coefficient

Fairfax Financial  Marimaca Copper

Very poor diversification

The 3 months correlation between Fairfax and Marimaca is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Marimaca Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marimaca Copper 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 Marimaca Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marimaca Copper Corp has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Marimaca Copper go up and down completely randomly.

Pair Corralation between Fairfax Financial and Marimaca Copper

Assuming the 90 days trading horizon Fairfax Financial is expected to generate 5.26 times less return on investment than Marimaca Copper. But when comparing it to its historical volatility, Fairfax Financial Holdings is 3.87 times less risky than Marimaca Copper. It trades about 0.28 of its potential returns per unit of risk. Marimaca Copper Corp is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  477.00  in Marimaca Copper Corp on October 22, 2024 and sell it today you would earn a total of  71.00  from holding Marimaca Copper Corp or generate 14.88% return on investment over 90 days.

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

Fairfax Financial Holdings  vs.  Marimaca Copper Corp

Fairfax Financial

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fairfax Financial Holdings are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical indicators, Fairfax Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Marimaca Copper Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Marimaca Copper Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Marimaca Copper displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fairfax Financial and Marimaca Copper

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

The idea behind Fairfax Financial Holdings and Marimaca Copper 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.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.