Correlation Between First Trust and Intact Financial
Can any of the company-specific risk be diversified away by investing in both First Trust 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 First Trust and Intact Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Indxx and Intact Financial Corp, you can compare the effects of market volatilities on First Trust 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 First Trust with a short position of Intact Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Intact Financial.
Diversification Opportunities for First Trust and Intact Financial
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Intact is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Indxx 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 First Trust 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 First Trust Indxx 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 First Trust i.e., First Trust and Intact Financial go up and down completely randomly.
Pair Corralation between First Trust and Intact Financial
Assuming the 90 days trading horizon First Trust is expected to generate 1.12 times less return on investment than Intact Financial. But when comparing it to its historical volatility, First Trust Indxx is 1.29 times less risky than Intact Financial. It trades about 0.11 of its potential returns per unit of risk. Intact Financial Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,794 in Intact Financial Corp on August 31, 2024 and sell it today you would earn a total of 647.00 from holding Intact Financial Corp or generate 36.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Indxx vs. Intact Financial Corp
Performance |
| Timeline |
| First Trust Indxx |
| Intact Financial Corp |
First Trust and Intact Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Intact Financial
The main advantage of trading using opposite First Trust and Intact Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust 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.| First Trust vs. iShares Canadian HYBrid | First Trust vs. Brompton European Dividend | First Trust vs. Solar Alliance Energy | First Trust vs. PHN Multi Style All Cap |
| Intact Financial vs. Fairfax Financial Holdings | Intact Financial vs. Fairfax Financial Holdings | Intact Financial vs. iShares Canadian HYBrid | Intact Financial vs. Brompton European Dividend |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |