Correlation Between Intact Financial and IShares Canadian

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

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

Diversification Opportunities for Intact Financial and IShares Canadian

0.63

Correlation Coefficient

Intact Financial  IShares Canadian

Poor diversification

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

Pair Corralation between Intact Financial and IShares Canadian

Assuming the 90 days trading horizon Intact Financial is expected to generate 3.27 times more return on investment than IShares Canadian. However, Intact Financial is 3.27 times more volatile than iShares Canadian HYBrid. It trades about 0.11 of its potential returns per unit of risk. iShares Canadian HYBrid is currently generating about 0.16 per unit of risk. If you would invest  25,316  in Intact Financial on September 13, 2024 and sell it today you would earn a total of  1,616  from holding Intact Financial or generate 6.38% return on investment over 90 days.

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

Intact Financial  vs.  iShares Canadian HYBrid

Intact Financial

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intact Financial are ranked lower than 8 (%) 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 January 2025.

iShares Canadian HYBrid

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Canadian HYBrid are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, IShares Canadian is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Intact Financial and IShares Canadian

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

The idea behind Intact Financial and iShares Canadian HYBrid 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.