Correlation Between Intact Financial and Admiral Group

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

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

Diversification Opportunities for Intact Financial and Admiral Group

-0.63

Correlation Coefficient

Intact Financial  Admiral Group

Excellent diversification

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

Pair Corralation between Intact Financial and Admiral Group

Assuming the 90 days horizon Intact Financial is expected to generate 0.67 times more return on investment than Admiral Group. However, Intact Financial is 1.5 times less risky than Admiral Group. It trades about 0.07 of its potential returns per unit of risk. Admiral Group PLC is currently generating about -0.13 per unit of risk. If you would invest  18,474  in Intact Financial on September 2, 2024 and sell it today you would earn a total of  801.00  from holding Intact Financial or generate 4.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Intact Financial  vs.  Admiral Group PLC

Intact Financial

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Intact Financial are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Intact Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Admiral Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Admiral Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Intact Financial and Admiral Group

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

The idea behind Intact Financial and Admiral Group PLC 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 Global Correlations module to find global opportunities by holding instruments from different markets.