Correlation Between Grande Portage and Fairfax Financial

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Can any of the company-specific risk be diversified away by investing in both Grande Portage and Fairfax Financial 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 Grande Portage and Fairfax Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grande Portage Resources and Fairfax Financial Holdings, you can compare the effects of market volatilities on Grande Portage and Fairfax Financial 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 Grande Portage with a short position of Fairfax Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grande Portage and Fairfax Financial.

Diversification Opportunities for Grande Portage and Fairfax Financial

-0.74
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Grande and Fairfax is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Grande Portage Resources and Fairfax Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairfax Financial and Grande Portage 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 Grande Portage Resources are associated (or correlated) with Fairfax Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fairfax Financial has no effect on the direction of Grande Portage i.e., Grande Portage and Fairfax Financial go up and down completely randomly.

Pair Corralation between Grande Portage and Fairfax Financial

Assuming the 90 days horizon Grande Portage Resources is expected to under-perform the Fairfax Financial. In addition to that, Grande Portage is 3.55 times more volatile than Fairfax Financial Holdings. It trades about -0.23 of its total potential returns per unit of risk. Fairfax Financial Holdings is currently generating about 0.28 per unit of volatility. If you would invest  149,388  in Fairfax Financial Holdings on April 22, 2024 and sell it today you would earn a total of  9,922  from holding Fairfax Financial Holdings or generate 6.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Grande Portage Resources  vs.  Fairfax Financial Holdings

 Performance 
       Timeline  
Grande Portage Resources 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Grande Portage Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in August 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.
Fairfax Financial 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Fairfax Financial Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical indicators, Fairfax Financial may actually be approaching a critical reversion point that can send shares even higher in August 2024.

Grande Portage and Fairfax Financial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Grande Portage and Fairfax Financial

The main advantage of trading using opposite Grande Portage and Fairfax Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grande Portage position performs unexpectedly, Fairfax Financial 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 Financial will offset losses from the drop in Fairfax Financial's long position.
The idea behind Grande Portage Resources and Fairfax Financial Holdings 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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