Correlation Between Intact Financial and Diamond Estates
Can any of the company-specific risk be diversified away by investing in both Intact Financial and Diamond Estates 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 Diamond Estates 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 Diamond Estates Wines, you can compare the effects of market volatilities on Intact Financial and Diamond Estates 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 Diamond Estates. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intact Financial and Diamond Estates.
Diversification Opportunities for Intact Financial and Diamond Estates
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Intact and Diamond is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Intact Financial Corp and Diamond Estates Wines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Estates Wines 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 Diamond Estates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Estates Wines has no effect on the direction of Intact Financial i.e., Intact Financial and Diamond Estates go up and down completely randomly.
Pair Corralation between Intact Financial and Diamond Estates
Assuming the 90 days trading horizon Intact Financial Corp is expected to generate 0.15 times more return on investment than Diamond Estates. However, Intact Financial Corp is 6.82 times less risky than Diamond Estates. It trades about 0.1 of its potential returns per unit of risk. Diamond Estates Wines is currently generating about -0.02 per unit of risk. If you would invest 1,859 in Intact Financial Corp on August 26, 2024 and sell it today you would earn a total of 566.00 from holding Intact Financial Corp or generate 30.45% 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. Diamond Estates Wines
Performance |
| Timeline |
| Intact Financial Corp |
| Diamond Estates Wines |
Intact Financial and Diamond Estates Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intact Financial and Diamond Estates
The main advantage of trading using opposite Intact Financial and Diamond Estates positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intact Financial position performs unexpectedly, Diamond Estates 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 Diamond Estates will offset losses from the drop in Diamond Estates' 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 |
| Diamond Estates vs. North American Financial | Diamond Estates vs. AGF Management Limited | Diamond Estates vs. Intact Financial Corp | Diamond Estates vs. Canso Credit Trust |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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