Correlation Between Fairfax Financial and Tree Island
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Tree Island 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 Tree Island 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 Tree Island Steel, you can compare the effects of market volatilities on Fairfax Financial and Tree Island 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 Tree Island. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Tree Island.
Diversification Opportunities for Fairfax Financial and Tree Island
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fairfax and Tree is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Tree Island Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tree Island Steel 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 Tree Island. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tree Island Steel has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Tree Island go up and down completely randomly.
Pair Corralation between Fairfax Financial and Tree Island
Assuming the 90 days trading horizon Fairfax Financial is expected to generate 2.94 times less return on investment than Tree Island. But when comparing it to its historical volatility, Fairfax Financial Holdings is 1.34 times less risky than Tree Island. It trades about 0.03 of its potential returns per unit of risk. Tree Island Steel is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 250.00 in Tree Island Steel on August 26, 2025 and sell it today you would earn a total of 18.00 from holding Tree Island Steel or generate 7.2% 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. Tree Island Steel
Performance |
| Timeline |
| Fairfax Financial |
| Tree Island Steel |
Fairfax Financial and Tree Island Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Tree Island
The main advantage of trading using opposite Fairfax Financial and Tree Island positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial position performs unexpectedly, Tree Island 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 Tree Island will offset losses from the drop in Tree Island's long position.| Fairfax Financial vs. Sparx Technology | Fairfax Financial vs. Firan Technology Group | Fairfax Financial vs. Arbor Metals Corp | Fairfax Financial vs. Constellation Software |
| Tree Island vs. First Majestic Silver | Tree Island vs. Ivanhoe Energy | Tree Island vs. Orezone Gold Corp | Tree Island vs. Faraday Copper Corp |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |