Correlation Between Intact Financial and Bip Investment

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

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

Diversification Opportunities for Intact Financial and Bip Investment

0.16

Correlation Coefficient

Intact Financial  Bip Investment

Average diversification

The 3 months correlation between Intact and Bip is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Intact Financial Corp and Bip Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bip Investment Corp and Intact 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 Intact Financial Corp are associated (or correlated) with Bip Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bip Investment Corp has no effect on the direction of Intact Financial i.e., Intact Financial and Bip Investment go up and down completely randomly.

Pair Corralation between Intact Financial and Bip Investment

If you would invest  2,660  in Bip Investment Corp on October 7, 2024 and sell it today you would earn a total of  0.00  from holding Bip Investment Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	78.95%
Values	Daily Returns

Intact Financial Corp  vs.  Bip Investment Corp

Intact Financial Corp

Risk-Adjusted Performance

0 of 100

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.

Bip Investment Corp

Risk-Adjusted Performance

0 of 100

Modest

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

Pair Trading with Intact Financial and Bip Investment

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

The idea behind Intact Financial Corp and Bip Investment 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.