Correlation Between Intact Financial and Onex Corp

Can any of the company-specific risk be diversified away by investing in both Intact Financial and Onex Corp 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 Onex Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Intact Financial and Onex Corp, you can compare the effects of market volatilities on Intact Financial and Onex Corp 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 Onex Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intact Financial and Onex Corp.

Diversification Opportunities for Intact Financial and Onex Corp

-0.63

Correlation Coefficient

Intact Financial  Onex Corp

Excellent diversification

The 3 months correlation between Intact and Onex is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Intact Financial and Onex Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Onex 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 are associated (or correlated) with Onex Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Onex Corp has no effect on the direction of Intact Financial i.e., Intact Financial and Onex Corp go up and down completely randomly.

Pair Corralation between Intact Financial and Onex Corp

Assuming the 90 days trading horizon Intact Financial is expected to generate 0.71 times more return on investment than Onex Corp. However, Intact Financial is 1.41 times less risky than Onex Corp. It trades about 0.13 of its potential returns per unit of risk. Onex Corp is currently generating about -0.15 per unit of risk. If you would invest  25,870  in Intact Financial on December 30, 2024 and sell it today you would earn a total of  2,745  from holding Intact Financial or generate 10.61% return on investment over 90 days.

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

Intact Financial  vs.  Onex Corp

Intact Financial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intact Financial are ranked lower than 10 (%) 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 April 2025.

Onex Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Onex Corp 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 very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Intact Financial and Onex Corp

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

The idea behind Intact Financial and Onex 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.