Correlation Between Intact Financial and Fairfax Fin
Can any of the company-specific risk be diversified away by investing in both Intact Financial and Fairfax Fin 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 Fairfax Fin 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 Fairfax Fin Hld, you can compare the effects of market volatilities on Intact Financial and Fairfax Fin 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 Fairfax Fin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intact Financial and Fairfax Fin.
Diversification Opportunities for Intact Financial and Fairfax Fin
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Intact and Fairfax is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Intact Financial Corp and Fairfax Fin Hld in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairfax Fin Hld 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 Fairfax Fin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fairfax Fin Hld has no effect on the direction of Intact Financial i.e., Intact Financial and Fairfax Fin go up and down completely randomly.
Pair Corralation between Intact Financial and Fairfax Fin
Assuming the 90 days trading horizon Intact Financial is expected to generate 6.88 times less return on investment than Fairfax Fin. But when comparing it to its historical volatility, Intact Financial Corp is 2.26 times less risky than Fairfax Fin. It trades about 0.12 of its potential returns per unit of risk. Fairfax Fin Hld is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 2,265 in Fairfax Fin Hld on August 29, 2024 and sell it today you would earn a total of 245.00 from holding Fairfax Fin Hld or generate 10.82% 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. Fairfax Fin Hld
Performance |
| Timeline |
| Intact Financial Corp |
| Fairfax Fin Hld |
Intact Financial and Fairfax Fin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intact Financial and Fairfax Fin
The main advantage of trading using opposite Intact Financial and Fairfax Fin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intact Financial position performs unexpectedly, Fairfax Fin 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 Fairfax Fin will offset losses from the drop in Fairfax Fin'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 |
| Fairfax Fin vs. Income Financial Trust | Fairfax Fin vs. Reliq Health Technologies | Fairfax Fin vs. iA Financial | Fairfax Fin vs. UnitedHealth Group CDR |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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