Correlation Between Coca Cola and Intact Financial

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

By analyzing existing cross correlation between The Coca Cola and Intact Financial, you can compare the effects of market volatilities on Coca Cola and Intact Financial 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 Coca Cola with a short position of Intact Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Intact Financial.

Diversification Opportunities for Coca Cola and Intact Financial

-0.52

Correlation Coefficient

Coca Cola  Intact Financial

Excellent diversification

The 3 months correlation between Coca and Intact is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Intact Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intact Financial and Coca Cola 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 The Coca Cola are associated (or correlated) with Intact Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intact Financial has no effect on the direction of Coca Cola i.e., Coca Cola and Intact Financial go up and down completely randomly.

Pair Corralation between Coca Cola and Intact Financial

Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the Intact Financial. But the stock apears to be less risky and, when comparing its historical volatility, The Coca Cola is 1.2 times less risky than Intact Financial. The stock trades about -0.21 of its potential returns per unit of risk. The Intact Financial is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  18,474  in Intact Financial on September 3, 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	Very Weak
Accuracy	98.44%
Values	Daily Returns

The Coca Cola  vs.  Intact Financial

Coca Cola

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Coca Cola has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

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.

Pair Trading with Coca Cola and Intact Financial

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

The idea behind The Coca Cola and Intact Financial 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.

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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.