Correlation Between Intact Financial and First National

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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 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

IntactFirstDiversified AwayIntactFirstDiversified Away100%
0.22
  Correlation Coefficient

Modest diversification

The 3 months correlation between Intact and First is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Intact Financial 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 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 is expected to generate 0.84 times more return on investment than First National. However, Intact Financial is 1.19 times less risky than First National. It trades about 0.09 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  18,220  in Intact Financial on November 29, 2024 and sell it today you would earn a total of  9,930  from holding Intact Financial or generate 54.5% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy99.8%
ValuesDaily Returns

Intact Financial  vs.  First National Financial

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -10-505
JavaScript chart by amCharts 3.21.15IFC FN
       Timeline  
Intact Financial 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Intact Financial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Intact Financial may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb250255260265270275280285290295
First National Financial 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days First National Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb363738394041424344

Intact Financial and First National Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.93-2.94-1.96-0.97-0.01640.971.983.04.025.04 0.10.20.30.4
JavaScript chart by amCharts 3.21.15IFC FN
       Returns  

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 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.
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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