Correlation Between Definity Financial and Intact Financial
Can any of the company-specific risk be diversified away by investing in both Definity Financial 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 Definity Financial and Intact Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Definity Financial Corp and Intact Financial Corp, you can compare the effects of market volatilities on Definity Financial 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 Definity Financial with a short position of Intact Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Definity Financial and Intact Financial.
Diversification Opportunities for Definity Financial and Intact Financial
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Definity and Intact is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Definity Financial Corp 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 Definity 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 Definity Financial Corp 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 Definity Financial i.e., Definity Financial and Intact Financial go up and down completely randomly.
Pair Corralation between Definity Financial and Intact Financial
Assuming the 90 days trading horizon Definity Financial Corp is expected to under-perform the Intact Financial. In addition to that, Definity Financial is 3.08 times more volatile than Intact Financial Corp. It trades about -0.05 of its total potential returns per unit of risk. Intact Financial Corp is currently generating about 0.08 per unit of volatility. If you would invest 2,428 in Intact Financial Corp on November 3, 2024 and sell it today you would earn a total of 16.00 from holding Intact Financial Corp or generate 0.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Definity Financial Corp vs. Intact Financial Corp
Performance |
| Timeline |
| Definity Financial Corp |
| Intact Financial Corp |
Definity Financial and Intact Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Definity Financial and Intact Financial
The main advantage of trading using opposite Definity Financial and Intact Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Definity Financial 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.| Definity Financial vs. Trisura Group | Definity Financial vs. Pet Valu Holdings | Definity Financial vs. Intact Financial | Definity Financial vs. Topaz Energy Corp |
| Intact Financial vs. Intact Financial Corp | Intact Financial vs. National Bank of | Intact Financial vs. Fairfax Financial Holdings | Intact Financial vs. Fairfax Financial Holdings |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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