Correlation Between Intact Financial and Global Healthcare

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

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

Diversification Opportunities for Intact Financial and Global Healthcare

0.53

Correlation Coefficient

Intact Financial  Global Healthcare

Very weak diversification

The 3 months correlation between Intact and Global is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Intact Financial and Global Healthcare REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Healthcare REIT 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 Global Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Healthcare REIT has no effect on the direction of Intact Financial i.e., Intact Financial and Global Healthcare go up and down completely randomly.

Pair Corralation between Intact Financial and Global Healthcare

Assuming the 90 days horizon Intact Financial is expected to generate 6.49 times less return on investment than Global Healthcare. But when comparing it to its historical volatility, Intact Financial is 6.05 times less risky than Global Healthcare. It trades about 0.1 of its potential returns per unit of risk. Global Healthcare REIT is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  200.00  in Global Healthcare REIT on December 9, 2024 and sell it today you would earn a total of  25.00  from holding Global Healthcare REIT or generate 12.5% return on investment over 90 days.

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

Intact Financial  vs.  Global Healthcare REIT

Intact Financial

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Intact Financial are ranked lower than 3 (%) 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.

Global Healthcare REIT

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global Healthcare REIT are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, Global Healthcare unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intact Financial and Global Healthcare

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

The idea behind Intact Financial and Global Healthcare REIT 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 Commodity Directory module to find actively traded commodities issued by global exchanges.