Correlation Between IShares SPTSX and Intact Financial

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

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

Diversification Opportunities for IShares SPTSX and Intact Financial

-0.52

Correlation Coefficient

IShares SPTSX  Intact Financial

Excellent diversification

The 3 months correlation between IShares and Intact is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding iShares SPTSX Capped and Intact Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intact Financial and IShares SPTSX 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 iShares SPTSX Capped 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 IShares SPTSX i.e., IShares SPTSX and Intact Financial go up and down completely randomly.

Pair Corralation between IShares SPTSX and Intact Financial

Assuming the 90 days trading horizon IShares SPTSX is expected to generate 2.27 times less return on investment than Intact Financial. In addition to that, IShares SPTSX is 1.07 times more volatile than Intact Financial. It trades about 0.06 of its total potential returns per unit of risk. Intact Financial is currently generating about 0.13 per unit of volatility. If you would invest  25,870  in Intact Financial on December 30, 2024 and sell it today you would earn a total of  2,745  from holding Intact Financial or generate 10.61% return on investment over 90 days.

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

iShares SPTSX Capped  vs.  Intact Financial

iShares SPTSX Capped

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares SPTSX Capped are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, IShares SPTSX is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

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. In spite of very unfluctuating fundamental indicators, Intact Financial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with IShares SPTSX and Intact Financial

The main advantage of trading using opposite IShares SPTSX and Intact Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SPTSX 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 iShares SPTSX Capped 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.