Correlation Between Fairfax Financial and Meta CDR

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

Diversification Opportunities for Fairfax Financial and Meta CDR

0.95

Correlation Coefficient

Fairfax Financial  Meta CDR

Almost no diversification

The 3 months correlation between Fairfax and Meta is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Meta CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta CDR 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 Meta CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meta CDR has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Meta CDR go up and down completely randomly.

Pair Corralation between Fairfax Financial and Meta CDR

Assuming the 90 days trading horizon Fairfax Financial is expected to generate 4.53 times less return on investment than Meta CDR. But when comparing it to its historical volatility, Fairfax Financial Holdings is 5.17 times less risky than Meta CDR. It trades about 0.35 of its potential returns per unit of risk. Meta CDR is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  2,664  in Meta CDR on April 21, 2025 and sell it today you would earn a total of  1,194  from holding Meta CDR or generate 44.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Fairfax Financial Holdings  vs.  Meta CDR

Fairfax Financial

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Fairfax Financial Holdings are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal technical indicators, Fairfax Financial may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Meta CDR

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Meta CDR are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Meta CDR displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fairfax Financial and Meta CDR

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

The idea behind Fairfax Financial Holdings and Meta CDR 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.