Correlation Between Fairfax Financial and Daito Trust
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Daito Trust 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 Daito Trust 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 Daito Trust Construction, you can compare the effects of market volatilities on Fairfax Financial and Daito Trust 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 Daito Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Daito Trust.
Diversification Opportunities for Fairfax Financial and Daito Trust
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Fairfax and Daito is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Daito Trust Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daito Trust Construction 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 Daito Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daito Trust Construction has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Daito Trust go up and down completely randomly.
Pair Corralation between Fairfax Financial and Daito Trust
Assuming the 90 days trading horizon Fairfax Financial Holdings is expected to generate 0.42 times more return on investment than Daito Trust. However, Fairfax Financial Holdings is 2.36 times less risky than Daito Trust. It trades about -0.01 of its potential returns per unit of risk. Daito Trust Construction is currently generating about -0.02 per unit of risk. If you would invest 148,280 in Fairfax Financial Holdings on January 26, 2024 and sell it today you would lose (555.00) from holding Fairfax Financial Holdings or give up 0.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fairfax Financial Holdings vs. Daito Trust Construction
Performance |
| Timeline |
| Fairfax Financial |
| Daito Trust Construction |
Fairfax Financial and Daito Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Daito Trust
The main advantage of trading using opposite Fairfax Financial and Daito Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Daito Trust 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 Daito Trust will offset losses from the drop in Daito Trust's long position.| Fairfax Financial vs. Element Fleet Management | Fairfax Financial vs. Martinrea International | Fairfax Financial vs. Mullen Group |
| Daito Trust vs. Comstock Holding Companies | Daito Trust vs. St Joe Company | Daito Trust vs. Stratus Properties |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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