Correlation Between Fairfax Financial and CI Financial
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and CI Financial 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 CI Financial 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 CI Financial Corp, you can compare the effects of market volatilities on Fairfax Financial and CI Financial 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 CI Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and CI Financial.
Diversification Opportunities for Fairfax Financial and CI Financial
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fairfax and CIX is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and CI Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Financial 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 CI Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Financial Corp has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and CI Financial go up and down completely randomly.
Pair Corralation between Fairfax Financial and CI Financial
Assuming the 90 days trading horizon Fairfax Financial is expected to generate 3.34 times less return on investment than CI Financial. But when comparing it to its historical volatility, Fairfax Financial Holdings is 2.37 times less risky than CI Financial. It trades about 0.18 of its potential returns per unit of risk. CI Financial Corp is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,727 in CI Financial Corp on September 12, 2024 and sell it today you would earn a total of 1,381 from holding CI Financial Corp or generate 79.97% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Fairfax Financial Holdings vs. CI Financial Corp
Performance |
Timeline |
Fairfax Financial |
CI Financial Corp |
Fairfax Financial and CI Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fairfax Financial and CI Financial
The main advantage of trading using opposite Fairfax Financial and CI Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, CI Financial 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 CI Financial will offset losses from the drop in CI Financial's long position.Fairfax Financial vs. Intact Financial | Fairfax Financial vs. iA Financial | Fairfax Financial vs. TMX Group Limited | Fairfax Financial vs. Onex Corp |
CI Financial vs. Brompton Lifeco Split | CI Financial vs. North American Financial | CI Financial vs. Prime Dividend Corp | CI Financial vs. Financial 15 Split |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |