Correlation Between Fairfax Financial and Standard Uranium
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Standard Uranium 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 Standard Uranium 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 Standard Uranium, you can compare the effects of market volatilities on Fairfax Financial and Standard Uranium 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 Standard Uranium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Standard Uranium.
Diversification Opportunities for Fairfax Financial and Standard Uranium
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fairfax and Standard is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Standard Uranium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Uranium 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 Standard Uranium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Uranium has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Standard Uranium go up and down completely randomly.
Pair Corralation between Fairfax Financial and Standard Uranium
Assuming the 90 days trading horizon Fairfax Financial Holdings is expected to generate 0.12 times more return on investment than Standard Uranium. However, Fairfax Financial Holdings is 8.09 times less risky than Standard Uranium. It trades about 0.18 of its potential returns per unit of risk. Standard Uranium is currently generating about -0.31 per unit of risk. If you would invest 195,509 in Fairfax Financial Holdings on September 26, 2024 and sell it today you would earn a total of 5,391 from holding Fairfax Financial Holdings or generate 2.76% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Fairfax Financial Holdings vs. Standard Uranium
Performance |
Timeline |
Fairfax Financial |
Standard Uranium |
Fairfax Financial and Standard Uranium Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fairfax Financial and Standard Uranium
The main advantage of trading using opposite Fairfax Financial and Standard Uranium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Standard Uranium 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 Standard Uranium will offset losses from the drop in Standard Uranium's long position.Fairfax Financial vs. Intact Financial | Fairfax Financial vs. iA Financial | Fairfax Financial vs. TMX Group Limited | Fairfax Financial vs. Onex Corp |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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