Correlation Between Fairfax Fin and Voyageur Pharmaceuticals

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

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

Diversification Opportunities for Fairfax Fin and Voyageur Pharmaceuticals

-0.71

Correlation Coefficient

Fairfax Fin  Voyageur Pharmaceuticals

Pay attention - limited upside

The 3 months correlation between Fairfax and Voyageur is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Fin Hld and Voyageur Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voyageur Pharmaceuticals and Fairfax Fin 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 Fin Hld are associated (or correlated) with Voyageur Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voyageur Pharmaceuticals has no effect on the direction of Fairfax Fin i.e., Fairfax Fin and Voyageur Pharmaceuticals go up and down completely randomly.

Pair Corralation between Fairfax Fin and Voyageur Pharmaceuticals

Assuming the 90 days trading horizon Fairfax Fin is expected to generate 3.56 times less return on investment than Voyageur Pharmaceuticals. But when comparing it to its historical volatility, Fairfax Fin Hld is 8.26 times less risky than Voyageur Pharmaceuticals. It trades about 0.04 of its potential returns per unit of risk. Voyageur Pharmaceuticals is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  10.00  in Voyageur Pharmaceuticals on January 31, 2024 and sell it today you would lose (5.00) from holding Voyageur Pharmaceuticals or give up 50.0% of portfolio value over 90 days.

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

Fairfax Fin Hld  vs.  Voyageur Pharmaceuticals

Fairfax Fin Hld

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fairfax Fin Hld are ranked lower than 14 (%) 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 May 2024.

Voyageur Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Voyageur Pharmaceuticals 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 May 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Fairfax Fin and Voyageur Pharmaceuticals

The main advantage of trading using opposite Fairfax Fin and Voyageur Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Fin position performs unexpectedly, Voyageur Pharmaceuticals 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 Voyageur Pharmaceuticals will offset losses from the drop in Voyageur Pharmaceuticals' long position.

The idea behind Fairfax Fin Hld and Voyageur Pharmaceuticals 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.