Correlation Between Fairfax Financial and Emera Pref
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Emera Pref 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 Emera Pref 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 Emera Pref A, you can compare the effects of market volatilities on Fairfax Financial and Emera Pref 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 Emera Pref. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Emera Pref.
Diversification Opportunities for Fairfax Financial and Emera Pref
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fairfax and Emera is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Emera Pref A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emera Pref A 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 Emera Pref. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emera Pref A has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Emera Pref go up and down completely randomly.
Pair Corralation between Fairfax Financial and Emera Pref
Assuming the 90 days trading horizon Fairfax Financial Holdings is expected to generate 0.94 times more return on investment than Emera Pref. However, Fairfax Financial Holdings is 1.06 times less risky than Emera Pref. It trades about 0.14 of its potential returns per unit of risk. Emera Pref A is currently generating about 0.11 per unit of risk. If you would invest 195,509 in Fairfax Financial Holdings on September 24, 2024 and sell it today you would earn a total of 4,287 from holding Fairfax Financial Holdings or generate 2.19% 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. Emera Pref A
Performance |
Timeline |
Fairfax Financial |
Emera Pref A |
Fairfax Financial and Emera Pref Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fairfax Financial and Emera Pref
The main advantage of trading using opposite Fairfax Financial and Emera Pref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Emera Pref 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 Emera Pref will offset losses from the drop in Emera Pref's long position.Fairfax Financial vs. Intact Financial | Fairfax Financial vs. iA Financial | Fairfax Financial vs. TMX Group Limited | Fairfax Financial vs. CI Financial Corp |
Emera Pref vs. Brookfield Asset Management | Emera Pref vs. Xtract One Technologies | Emera Pref vs. Quisitive Technology Solutions | Emera Pref vs. Arbor Metals Corp |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |