Correlation Between Intact Financial and First National

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

Diversification Opportunities for Intact Financial and First National

0.2

Correlation Coefficient

Intact Financial  First National

Modest diversification

The 3 months correlation between Intact and First is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Intact Financial Corp and First National Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First National Financial 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 First National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First National Financial has no effect on the direction of Intact Financial i.e., Intact Financial and First National go up and down completely randomly.

Pair Corralation between Intact Financial and First National

Assuming the 90 days trading horizon Intact Financial Corp is expected to generate 0.59 times more return on investment than First National. However, Intact Financial Corp is 1.7 times less risky than First National. It trades about 0.1 of its potential returns per unit of risk. First National Financial is currently generating about 0.04 per unit of risk. If you would invest  2,347  in Intact Financial Corp on August 31, 2024 and sell it today you would earn a total of  91.00  from holding Intact Financial Corp or generate 3.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Intact Financial Corp  vs.  First National Financial

Intact Financial Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intact Financial Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. 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.

First National Financial

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in First National Financial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, First National is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Intact Financial and First National

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

The idea behind Intact Financial Corp and First National Financial 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.

Check out your portfolio center.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.