Correlation Between Intact Financial and ValOre Metals

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

Diversification Opportunities for Intact Financial and ValOre Metals

-0.47

Correlation Coefficient

Intact Financial  ValOre Metals

Very good diversification

The 3 months correlation between Intact and ValOre is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Intact Financial Corp and ValOre Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ValOre Metals 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 ValOre Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ValOre Metals Corp has no effect on the direction of Intact Financial i.e., Intact Financial and ValOre Metals go up and down completely randomly.

Pair Corralation between Intact Financial and ValOre Metals

Assuming the 90 days trading horizon Intact Financial Corp is expected to under-perform the ValOre Metals. But the preferred stock apears to be less risky and, when comparing its historical volatility, Intact Financial Corp is 15.59 times less risky than ValOre Metals. The preferred stock trades about -0.03 of its potential returns per unit of risk. The ValOre Metals Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  8.00  in ValOre Metals Corp on December 30, 2024 and sell it today you would lose (1.00) from holding ValOre Metals Corp or give up 12.5% of portfolio value over 90 days.

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

Intact Financial Corp  vs.  ValOre Metals 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.

ValOre Metals Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days ValOre Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, ValOre Metals is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Intact Financial and ValOre Metals

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

The idea behind Intact Financial Corp and ValOre Metals 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.