Correlation Between Intact Financial and Inovalis Real

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

Diversification Opportunities for Intact Financial and Inovalis Real

-0.54

Correlation Coefficient

Intact Financial  Inovalis Real

Excellent diversification

The 3 months correlation between Intact and Inovalis is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Intact Financial Corp and Inovalis Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inovalis Real Estate 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 Inovalis Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inovalis Real Estate has no effect on the direction of Intact Financial i.e., Intact Financial and Inovalis Real go up and down completely randomly.

Pair Corralation between Intact Financial and Inovalis Real

Assuming the 90 days trading horizon Intact Financial Corp is expected to generate 0.26 times more return on investment than Inovalis Real. However, Intact Financial Corp is 3.78 times less risky than Inovalis Real. It trades about 0.1 of its potential returns per unit of risk. Inovalis Real Estate is currently generating about -0.16 per unit of risk. If you would invest  2,362  in Intact Financial Corp on September 12, 2024 and sell it today you would earn a total of  88.00  from holding Intact Financial Corp or generate 3.73% return on investment over 90 days.

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

Intact Financial Corp  vs.  Inovalis Real Estate

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.

Inovalis Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inovalis Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Intact Financial and Inovalis Real

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

The idea behind Intact Financial Corp and Inovalis Real Estate 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.