Correlation Between Fairfax Financial and VerticalScope Holdings

Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and VerticalScope Holdings 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 VerticalScope Holdings 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 VerticalScope Holdings, you can compare the effects of market volatilities on Fairfax Financial and VerticalScope Holdings 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 VerticalScope Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and VerticalScope Holdings.

Diversification Opportunities for Fairfax Financial and VerticalScope Holdings

-0.86

Correlation Coefficient

Fairfax Financial  VerticalScope Holdings

Pay attention - limited upside

The 3 months correlation between Fairfax and VerticalScope is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and VerticalScope Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VerticalScope Holdings 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 VerticalScope Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VerticalScope Holdings has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and VerticalScope Holdings go up and down completely randomly.

Pair Corralation between Fairfax Financial and VerticalScope Holdings

Assuming the 90 days trading horizon Fairfax Financial Holdings is expected to generate 0.09 times more return on investment than VerticalScope Holdings. However, Fairfax Financial Holdings is 10.77 times less risky than VerticalScope Holdings. It trades about 0.32 of its potential returns per unit of risk. VerticalScope Holdings is currently generating about -0.07 per unit of risk. If you would invest  2,301  in Fairfax Financial Holdings on April 24, 2025 and sell it today you would earn a total of  173.00  from holding Fairfax Financial Holdings or generate 7.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Fairfax Financial Holdings  vs.  VerticalScope Holdings

Fairfax Financial

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fairfax Financial Holdings are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady technical indicators, Fairfax Financial may actually be approaching a critical reversion point that can send shares even higher in August 2025.

VerticalScope Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days VerticalScope Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in August 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Fairfax Financial and VerticalScope Holdings

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

The idea behind Fairfax Financial Holdings and VerticalScope 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 Stocks Directory module to find actively traded stocks across global markets.