Correlation Between Fairfax Financial and Power Fi

Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Power Fi 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 Power Fi 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 Power Fi 440, you can compare the effects of market volatilities on Fairfax Financial and Power Fi 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 Power Fi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Power Fi.

Diversification Opportunities for Fairfax Financial and Power Fi

0.93

Correlation Coefficient

Fairfax Financial  Power Fi

Almost no diversification

The 3 months correlation between Fairfax and Power is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Power Fi 440 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Fi 440 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 Power Fi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Fi 440 has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Power Fi go up and down completely randomly.

Pair Corralation between Fairfax Financial and Power Fi

Assuming the 90 days trading horizon Fairfax Financial is expected to generate 4.36 times less return on investment than Power Fi. But when comparing it to its historical volatility, Fairfax Financial Holdings is 1.92 times less risky than Power Fi. It trades about 0.16 of its potential returns per unit of risk. Power Fi 440 is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  1,520  in Power Fi 440 on May 6, 2025 and sell it today you would earn a total of  365.00  from holding Power Fi 440 or generate 24.01% 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.  Power Fi 440

Fairfax Financial

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fairfax Financial Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical indicators, Fairfax Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Power Fi 440

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Power Fi 440 are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal technical and fundamental indicators, Power Fi sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fairfax Financial and Power Fi

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

The idea behind Fairfax Financial Holdings and Power Fi 440 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.