Correlation Between Intact Financial and CI Financial

Can any of the company-specific risk be diversified away by investing in both Intact Financial and CI 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 Intact Financial and CI Financial 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 CI Financial Corp, you can compare the effects of market volatilities on Intact Financial and CI 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 Intact Financial with a short position of CI Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intact Financial and CI Financial.

Diversification Opportunities for Intact Financial and CI Financial

0.5

Correlation Coefficient

Intact Financial  CI Financial

Very weak diversification

The 3 months correlation between Intact and CIX is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Intact Financial Corp and CI Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Financial 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 CI Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Financial Corp has no effect on the direction of Intact Financial i.e., Intact Financial and CI Financial go up and down completely randomly.

Pair Corralation between Intact Financial and CI Financial

Assuming the 90 days trading horizon Intact Financial Corp is expected to under-perform the CI Financial. In addition to that, Intact Financial is 2.6 times more volatile than CI Financial Corp. It trades about -0.03 of its total potential returns per unit of risk. CI Financial Corp is currently generating about 0.13 per unit of volatility. If you would invest  3,075  in CI Financial Corp on December 29, 2024 and sell it today you would earn a total of  47.00  from holding CI Financial Corp or generate 1.53% return on investment over 90 days.

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

Intact Financial Corp  vs.  CI Financial Corp

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.

CI Financial Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CI Financial Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, CI Financial is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Intact Financial and CI Financial

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

The idea behind Intact Financial Corp and CI 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.