Correlation Between Backstageplay and Fairfax Fin

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

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

Diversification Opportunities for Backstageplay and Fairfax Fin

-0.91

Correlation Coefficient

Backstageplay  Fairfax Fin

Pay attention - limited upside

The 3 months correlation between Backstageplay and Fairfax is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Backstageplay 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 Backstageplay 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 Backstageplay 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 Backstageplay i.e., Backstageplay and Fairfax Fin go up and down completely randomly.

Pair Corralation between Backstageplay and Fairfax Fin

Given the investment horizon of 90 days Backstageplay is expected to under-perform the Fairfax Fin. In addition to that, Backstageplay is 4.82 times more volatile than Fairfax Fin Hld. It trades about -0.24 of its total potential returns per unit of risk. Fairfax Fin Hld is currently generating about 0.28 per unit of volatility. If you would invest  2,026  in Fairfax Fin Hld on February 28, 2024 and sell it today you would earn a total of  238.00  from holding Fairfax Fin Hld or generate 11.75% return on investment over 90 days.

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

Backstageplay  vs.  Fairfax Fin Hld

Backstageplay

Risk-Adjusted Performance

0 of 100

Very Weak

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

Fairfax Fin Hld

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fairfax Fin Hld are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Fairfax Fin may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Backstageplay and Fairfax Fin

The main advantage of trading using opposite Backstageplay and Fairfax Fin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Backstageplay 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 Backstageplay 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.