Correlation Between Helios Fairfax and WildBrain

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

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

Diversification Opportunities for Helios Fairfax and WildBrain

-0.87

Correlation Coefficient

Helios Fairfax  WildBrain

Pay attention - limited upside

The 3 months correlation between Helios and WildBrain is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Helios Fairfax Partners and WildBrain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WildBrain and Helios Fairfax 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 Helios Fairfax Partners are associated (or correlated) with WildBrain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WildBrain has no effect on the direction of Helios Fairfax i.e., Helios Fairfax and WildBrain go up and down completely randomly.

Pair Corralation between Helios Fairfax and WildBrain

Assuming the 90 days trading horizon Helios Fairfax Partners is expected to generate 0.77 times more return on investment than WildBrain. However, Helios Fairfax Partners is 1.3 times less risky than WildBrain. It trades about 0.06 of its potential returns per unit of risk. WildBrain is currently generating about 0.0 per unit of risk. If you would invest  250.00  in Helios Fairfax Partners on September 12, 2024 and sell it today you would earn a total of  20.00  from holding Helios Fairfax Partners or generate 8.0% return on investment over 90 days.

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

Helios Fairfax Partners  vs.  WildBrain

Helios Fairfax Partners

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Helios Fairfax Partners are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Helios Fairfax may actually be approaching a critical reversion point that can send shares even higher in January 2025.

WildBrain

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WildBrain has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, WildBrain is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Helios Fairfax and WildBrain

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

The idea behind Helios Fairfax Partners and WildBrain 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.