Correlation Between Powerof Canada and Intact Financial

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

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

Diversification Opportunities for Powerof Canada and Intact Financial

0.67

Correlation Coefficient

Powerof Canada  Intact Financial

Poor diversification

The 3 months correlation between Powerof and Intact is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Power of and Intact Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intact Financial and Powerof Canada 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 Power of 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 Powerof Canada i.e., Powerof Canada and Intact Financial go up and down completely randomly.

Pair Corralation between Powerof Canada and Intact Financial

Assuming the 90 days horizon Power of is expected to generate 0.92 times more return on investment than Intact Financial. However, Power of is 1.09 times less risky than Intact Financial. It trades about 0.17 of its potential returns per unit of risk. Intact Financial is currently generating about 0.07 per unit of risk. If you would invest  3,030  in Power of on September 3, 2024 and sell it today you would earn a total of  317.00  from holding Power of or generate 10.46% return on investment over 90 days.

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

Power of  vs.  Intact Financial

Powerof Canada

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Power of are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating fundamental indicators, Powerof Canada may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 Powerof Canada and Intact Financial

The main advantage of trading using opposite Powerof Canada and Intact Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Powerof Canada 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 Power of 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.