Correlation Between Fairfax Financial and Boston Pizza

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

Diversification Opportunities for Fairfax Financial and Boston Pizza

0.93

Correlation Coefficient

Fairfax Financial  Boston Pizza

Almost no diversification

The 3 months correlation between Fairfax and Boston is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Boston Pizza Royalties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Pizza Royalties 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 Boston Pizza. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Pizza Royalties has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Boston Pizza go up and down completely randomly.

Pair Corralation between Fairfax Financial and Boston Pizza

Assuming the 90 days trading horizon Fairfax Financial is expected to generate 1.3 times less return on investment than Boston Pizza. But when comparing it to its historical volatility, Fairfax Financial Holdings is 1.53 times less risky than Boston Pizza. It trades about 0.29 of its potential returns per unit of risk. Boston Pizza Royalties is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  1,772  in Boston Pizza Royalties on May 4, 2025 and sell it today you would earn a total of  183.00  from holding Boston Pizza Royalties or generate 10.33% 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.  Boston Pizza Royalties

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 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical indicators, Fairfax Financial may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Boston Pizza Royalties

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Pizza Royalties are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Boston Pizza may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Fairfax Financial and Boston Pizza

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

The idea behind Fairfax Financial Holdings and Boston Pizza Royalties 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.