Correlation Between Dorel Industries and Intact Financial
Can any of the company-specific risk be diversified away by investing in both Dorel Industries 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 Dorel Industries and Intact Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dorel Industries and Intact Financial Corp, you can compare the effects of market volatilities on Dorel Industries 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 Dorel Industries with a short position of Intact Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dorel Industries and Intact Financial.
Diversification Opportunities for Dorel Industries and Intact Financial
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dorel and Intact is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Dorel Industries 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 Dorel Industries 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 Dorel Industries 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 Dorel Industries i.e., Dorel Industries and Intact Financial go up and down completely randomly.
Pair Corralation between Dorel Industries and Intact Financial
Assuming the 90 days trading horizon Dorel Industries is expected to under-perform the Intact Financial. In addition to that, Dorel Industries is 6.0 times more volatile than Intact Financial Corp. It trades about -0.27 of its total potential returns per unit of risk. Intact Financial Corp is currently generating about 0.13 per unit of volatility. If you would invest 2,400 in Intact Financial Corp on September 1, 2024 and sell it today you would earn a total of 38.00 from holding Intact Financial Corp or generate 1.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dorel Industries vs. Intact Financial Corp
Performance |
| Timeline |
| Dorel Industries |
| Intact Financial Corp |
Dorel Industries and Intact Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dorel Industries and Intact Financial
The main advantage of trading using opposite Dorel Industries and Intact Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dorel Industries 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.| Dorel Industries vs. Transcontinental | Dorel Industries vs. Gildan Activewear | Dorel Industries vs. Cogeco Communications | Dorel Industries vs. High Liner Foods |
| 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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