Correlation Between Intact Financial and Medical Facilities
Can any of the company-specific risk be diversified away by investing in both Intact Financial and Medical Facilities 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 Medical Facilities 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 Medical Facilities, you can compare the effects of market volatilities on Intact Financial and Medical Facilities 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 Medical Facilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intact Financial and Medical Facilities.
Diversification Opportunities for Intact Financial and Medical Facilities
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Intact and Medical is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Intact Financial Corp and Medical Facilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Facilities 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 Medical Facilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Facilities has no effect on the direction of Intact Financial i.e., Intact Financial and Medical Facilities go up and down completely randomly.
Pair Corralation between Intact Financial and Medical Facilities
Assuming the 90 days trading horizon Intact Financial is expected to generate 11.11 times less return on investment than Medical Facilities. But when comparing it to its historical volatility, Intact Financial Corp is 2.5 times less risky than Medical Facilities. It trades about 0.05 of its potential returns per unit of risk. Medical Facilities is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,349 in Medical Facilities on August 29, 2024 and sell it today you would earn a total of 250.00 from holding Medical Facilities or generate 18.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intact Financial Corp vs. Medical Facilities
Performance |
| Timeline |
| Intact Financial Corp |
| Medical Facilities |
Intact Financial and Medical Facilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intact Financial and Medical Facilities
The main advantage of trading using opposite Intact Financial and Medical Facilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intact Financial position performs unexpectedly, Medical Facilities 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 Medical Facilities will offset losses from the drop in Medical Facilities' long position.| Intact Financial vs. Walmart Inc CDR | Intact Financial vs. Amazon CDR | Intact Financial vs. Berkshire Hathaway CDR | Intact Financial vs. UnitedHealth Group CDR |
| Medical Facilities vs. Solar Alliance Energy | Medical Facilities vs. Braille Energy Systems | Medical Facilities vs. MedMira | Medical Facilities vs. Lite Access Technologies |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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