Correlation Between Great West and Intact Financial
Can any of the company-specific risk be diversified away by investing in both Great West 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 Great West and Intact Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great West Lifeco and Intact Financial Corp, you can compare the effects of market volatilities on Great West 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 Great West with a short position of Intact Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great West and Intact Financial.
Diversification Opportunities for Great West and Intact Financial
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Great and Intact is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Great West Lifeco 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 Great West 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 Great West Lifeco 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 Great West i.e., Great West and Intact Financial go up and down completely randomly.
Pair Corralation between Great West and Intact Financial
Assuming the 90 days trading horizon Great West Lifeco is expected to under-perform the Intact Financial. But the preferred stock apears to be less risky and, when comparing its historical volatility, Great West Lifeco is 1.29 times less risky than Intact Financial. The preferred stock trades about -0.22 of its potential returns per unit of risk. The Intact Financial Corp is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest 2,243 in Intact Financial Corp on August 29, 2024 and sell it today you would lose (53.00) from holding Intact Financial Corp or give up 2.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great West Lifeco vs. Intact Financial Corp
Performance |
| Timeline |
| Great West Lifeco |
| Intact Financial Corp |
Great West and Intact Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great West and Intact Financial
The main advantage of trading using opposite Great West and Intact Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great West 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.| Great West vs. Aya Gold Silver | Great West vs. Profound Medical Corp | Great West vs. Globex Mining Enterprises | Great West vs. Perseus Mining |
| 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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