Correlation Between Intact Financial and Sun Peak

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

Diversification Opportunities for Intact Financial and Sun Peak

-0.2

Correlation Coefficient

Intact Financial  Sun Peak

Good diversification

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

Pair Corralation between Intact Financial and Sun Peak

Assuming the 90 days trading horizon Intact Financial is expected to generate 2.45 times less return on investment than Sun Peak. But when comparing it to its historical volatility, Intact Financial Corp is 13.4 times less risky than Sun Peak. It trades about 0.16 of its potential returns per unit of risk. Sun Peak Metals is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  30.00  in Sun Peak Metals on October 26, 2024 and sell it today you would earn a total of  0.00  from holding Sun Peak Metals or generate 0.0% return on investment over 90 days.

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

Intact Financial Corp  vs.  Sun Peak Metals

Intact Financial Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intact Financial Corp are ranked lower than 1 (%) 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 recent stock price disturbance, may contribute to short-term losses for the investors.

Sun Peak Metals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Intact Financial and Sun Peak

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

The idea behind Intact Financial Corp and Sun Peak Metals 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.