Correlation Between Nano One and Fairfax Fin

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

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

Diversification Opportunities for Nano One and Fairfax Fin

-0.59

Correlation Coefficient

Nano One  Fairfax Fin

Excellent diversification

The 3 months correlation between Nano and Fairfax is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Nano One Materials and Fairfax Fin Hld in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairfax Fin Hld and Nano One 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 Nano One Materials are associated (or correlated) with Fairfax Fin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fairfax Fin Hld has no effect on the direction of Nano One i.e., Nano One and Fairfax Fin go up and down completely randomly.

Pair Corralation between Nano One and Fairfax Fin

Assuming the 90 days trading horizon Nano One Materials is expected to under-perform the Fairfax Fin. In addition to that, Nano One is 4.63 times more volatile than Fairfax Fin Hld. It trades about -0.04 of its total potential returns per unit of risk. Fairfax Fin Hld is currently generating about 0.26 per unit of volatility. If you would invest  2,180  in Fairfax Fin Hld on October 7, 2024 and sell it today you would earn a total of  319.00  from holding Fairfax Fin Hld or generate 14.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

Nano One Materials  vs.  Fairfax Fin Hld

Nano One Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nano One Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Fairfax Fin Hld

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fairfax Fin Hld are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical indicators, Fairfax Fin sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nano One and Fairfax Fin

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

The idea behind Nano One Materials and Fairfax Fin Hld 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.