Correlation Between Intact Financial and Skanska AB

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

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

Diversification Opportunities for Intact Financial and Skanska AB

0.91

Correlation Coefficient

Intact Financial  Skanska AB

Almost no diversification

The 3 months correlation between Intact and Skanska is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Intact Financial and Skanska AB ser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skanska AB ser 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 Skanska AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skanska AB ser has no effect on the direction of Intact Financial i.e., Intact Financial and Skanska AB go up and down completely randomly.

Pair Corralation between Intact Financial and Skanska AB

Assuming the 90 days horizon Intact Financial is expected to generate 0.65 times more return on investment than Skanska AB. However, Intact Financial is 1.53 times less risky than Skanska AB. It trades about 0.13 of its potential returns per unit of risk. Skanska AB ser is currently generating about 0.07 per unit of risk. If you would invest  18,053  in Intact Financial on December 29, 2024 and sell it today you would earn a total of  1,911  from holding Intact Financial or generate 10.59% return on investment over 90 days.

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

Intact Financial  vs.  Skanska AB ser

Intact Financial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intact Financial are ranked lower than 9 (%) 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.

Skanska AB ser

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Skanska AB ser are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Skanska AB may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Intact Financial and Skanska AB

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

The idea behind Intact Financial and Skanska AB ser 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.