Correlation Between Intact Financial and CVS HEALTH
Can any of the company-specific risk be diversified away by investing in both Intact Financial and CVS HEALTH 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 CVS HEALTH 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 CVS HEALTH CDR, you can compare the effects of market volatilities on Intact Financial and CVS HEALTH 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 CVS HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intact Financial and CVS HEALTH.
Diversification Opportunities for Intact Financial and CVS HEALTH
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Intact and CVS is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Intact Financial Corp and CVS HEALTH CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS HEALTH CDR 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 CVS HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS HEALTH CDR has no effect on the direction of Intact Financial i.e., Intact Financial and CVS HEALTH go up and down completely randomly.
Pair Corralation between Intact Financial and CVS HEALTH
Assuming the 90 days trading horizon Intact Financial Corp is expected to generate 0.18 times more return on investment than CVS HEALTH. However, Intact Financial Corp is 5.62 times less risky than CVS HEALTH. It trades about 0.29 of its potential returns per unit of risk. CVS HEALTH CDR is currently generating about -0.07 per unit of risk. If you would invest 2,384 in Intact Financial Corp on September 13, 2024 and sell it today you would earn a total of 66.00 from holding Intact Financial Corp or generate 2.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intact Financial Corp vs. CVS HEALTH CDR
Performance |
| Timeline |
| Intact Financial Corp |
| CVS HEALTH CDR |
Intact Financial and CVS HEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intact Financial and CVS HEALTH
The main advantage of trading using opposite Intact Financial and CVS HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intact Financial position performs unexpectedly, CVS HEALTH 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 CVS HEALTH will offset losses from the drop in CVS HEALTH's long position.| Intact Financial vs. Brookfield Infrastructure Partners | Intact Financial vs. Brookfield Infrastructure Partners | Intact Financial vs. iShares Canadian HYBrid | Intact Financial vs. Solar Alliance Energy |
| CVS HEALTH vs. Extendicare | CVS HEALTH vs. Sienna Senior Living | CVS HEALTH vs. Rogers Sugar | CVS HEALTH vs. Chemtrade Logistics Income |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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