Correlation Between Intact Financial and Powerof Canada

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

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

Diversification Opportunities for Intact Financial and Powerof Canada

0.88

Correlation Coefficient

Intact Financial  Powerof Canada

Very poor diversification

The 3 months correlation between Intact and Powerof is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Intact Financial and Power of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powerof Canada 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 Powerof Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powerof Canada has no effect on the direction of Intact Financial i.e., Intact Financial and Powerof Canada go up and down completely randomly.

Pair Corralation between Intact Financial and Powerof Canada

Assuming the 90 days horizon Intact Financial is expected to generate 1.13 times less return on investment than Powerof Canada. But when comparing it to its historical volatility, Intact Financial is 1.02 times less risky than Powerof Canada. It trades about 0.13 of its potential returns per unit of risk. Power of is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  3,153  in Power of on December 28, 2024 and sell it today you would earn a total of  387.00  from holding Power of or generate 12.27% return on investment over 90 days.

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

Intact Financial  vs.  Power of

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. Despite nearly fragile basic indicators, Intact Financial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Powerof Canada

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Power of are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Powerof Canada reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intact Financial and Powerof Canada

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

The idea behind Intact Financial and Power of 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.