Correlation Between Intact Financial and Canadian Imperial
Can any of the company-specific risk be diversified away by investing in both Intact Financial and Canadian Imperial 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 Intact Financial and Canadian Imperial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intact Financial Corp and Canadian Imperial Bank, you can compare the effects of market volatilities on Intact Financial and Canadian Imperial 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 Intact Financial with a short position of Canadian Imperial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intact Financial and Canadian Imperial.
Diversification Opportunities for Intact Financial and Canadian Imperial
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Intact and Canadian is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Intact Financial Corp and Canadian Imperial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Imperial Bank and Intact 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 Intact Financial Corp are associated (or correlated) with Canadian Imperial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Imperial Bank has no effect on the direction of Intact Financial i.e., Intact Financial and Canadian Imperial go up and down completely randomly.
Pair Corralation between Intact Financial and Canadian Imperial
Assuming the 90 days trading horizon Intact Financial Corp is expected to generate 2.84 times more return on investment than Canadian Imperial. However, Intact Financial is 2.84 times more volatile than Canadian Imperial Bank. It trades about 0.13 of its potential returns per unit of risk. Canadian Imperial Bank is currently generating about 0.21 per unit of risk. 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 Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intact Financial Corp vs. Canadian Imperial Bank
Performance |
| Timeline |
| Intact Financial Corp |
| Canadian Imperial Bank |
Intact Financial and Canadian Imperial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intact Financial and Canadian Imperial
The main advantage of trading using opposite Intact Financial and Canadian Imperial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intact Financial position performs unexpectedly, Canadian Imperial 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 Canadian Imperial will offset losses from the drop in Canadian Imperial's long position.| Intact Financial vs. Intact Financial Corp | Intact Financial vs. National Bank of | Intact Financial vs. Fairfax Financial Holdings | Intact Financial vs. Fairfax Financial Holdings |
| Canadian Imperial vs. Capstone Mining Corp | Canadian Imperial vs. Vizsla Silver Corp | Canadian Imperial vs. Renoworks Software | Canadian Imperial vs. Aya Gold Silver |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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