Correlation Between Bank of America and Intact Financial
Can any of the company-specific risk be diversified away by investing in both Bank of America 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 Bank of America and Intact Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of America and Intact Financial Corp, you can compare the effects of market volatilities on Bank of America 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 Bank of America with a short position of Intact Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Intact Financial.
Diversification Opportunities for Bank of America and Intact Financial
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Intact is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Intact Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intact Financial Corp and Bank of America 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 Bank of America 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 Corp has no effect on the direction of Bank of America i.e., Bank of America and Intact Financial go up and down completely randomly.
Pair Corralation between Bank of America and Intact Financial
Assuming the 90 days trading horizon Bank of America is expected to generate 4.67 times more return on investment than Intact Financial. However, Bank of America is 4.67 times more volatile than Intact Financial Corp. It trades about 0.28 of its potential returns per unit of risk. Intact Financial Corp is currently generating about -0.15 per unit of risk. If you would invest 2,153 in Bank of America on September 5, 2024 and sell it today you would earn a total of 285.00 from holding Bank of America or generate 13.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Intact Financial Corp
Performance |
| Timeline |
| Bank of America |
| Intact Financial Corp |
Bank of America and Intact Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Intact Financial
The main advantage of trading using opposite Bank of America and Intact Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America 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.| Bank of America vs. Canadian Imperial Bank | Bank of America vs. Bank of Montreal | Bank of America vs. Royal Bank of | Bank of America vs. Bank of Nova |
| Intact Financial vs. Intact Financial Corp | Intact Financial vs. Great West Lifeco | Intact Financial vs. Great Wes 515 | Intact Financial vs. Power Financial Corp |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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