Correlation Between Intact Financial and Sabio Holdings

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

Diversification Opportunities for Intact Financial and Sabio Holdings

0.35

Correlation Coefficient

Intact Financial  Sabio Holdings

Weak diversification

The 3 months correlation between Intact and Sabio is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Intact Financial Corp and Sabio Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabio Holdings 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 Sabio Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabio Holdings has no effect on the direction of Intact Financial i.e., Intact Financial and Sabio Holdings go up and down completely randomly.

Pair Corralation between Intact Financial and Sabio Holdings

Assuming the 90 days trading horizon Intact Financial is expected to generate 3.3 times less return on investment than Sabio Holdings. But when comparing it to its historical volatility, Intact Financial Corp is 6.31 times less risky than Sabio Holdings. It trades about 0.16 of its potential returns per unit of risk. Sabio Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  50.00  in Sabio Holdings on October 26, 2024 and sell it today you would earn a total of  2.00  from holding Sabio Holdings or generate 4.0% return on investment over 90 days.

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

Intact Financial Corp  vs.  Sabio Holdings

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.

Sabio Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sabio Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating forward indicators, Sabio Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Intact Financial and Sabio Holdings

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

The idea behind Intact Financial Corp and Sabio Holdings 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.