Correlation Between Falcon Energy and Intact Financial

Can any of the company-specific risk be diversified away by investing in both Falcon Energy and Intact Financial 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 Falcon Energy and Intact Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Falcon Energy Materials and Intact Financial Corp, you can compare the effects of market volatilities on Falcon Energy and Intact Financial 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 Falcon Energy with a short position of Intact Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Energy and Intact Financial.

Diversification Opportunities for Falcon Energy and Intact Financial

0.4

Correlation Coefficient

Falcon Energy  Intact Financial

Very weak diversification

The 3 months correlation between Falcon and Intact is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Energy Materials and Intact Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intact Financial Corp and Falcon Energy 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 Falcon Energy Materials are associated (or correlated) with Intact Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intact Financial Corp has no effect on the direction of Falcon Energy i.e., Falcon Energy and Intact Financial go up and down completely randomly.

Pair Corralation between Falcon Energy and Intact Financial

Assuming the 90 days trading horizon Falcon Energy Materials is expected to under-perform the Intact Financial. In addition to that, Falcon Energy is 9.8 times more volatile than Intact Financial Corp. It trades about -0.05 of its total potential returns per unit of risk. Intact Financial Corp is currently generating about -0.03 per unit of volatility. If you would invest  2,402  in Intact Financial Corp on December 30, 2024 and sell it today you would lose (26.00) from holding Intact Financial Corp or give up 1.08% of portfolio value over 90 days.

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

Falcon Energy Materials  vs.  Intact Financial Corp

Falcon Energy Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days Falcon Energy Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Intact Financial Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Intact Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Intact Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Falcon Energy and Intact Financial

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

The idea behind Falcon Energy Materials and Intact Financial Corp 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.