Correlation Between Intact Financial and GOLDMAN SACHS
Can any of the company-specific risk be diversified away by investing in both Intact Financial and GOLDMAN SACHS 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 GOLDMAN SACHS 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 GOLDMAN SACHS CDR, you can compare the effects of market volatilities on Intact Financial and GOLDMAN SACHS 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 GOLDMAN SACHS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intact Financial and GOLDMAN SACHS.
Diversification Opportunities for Intact Financial and GOLDMAN SACHS
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Intact and GOLDMAN is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Intact Financial Corp and GOLDMAN SACHS CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOLDMAN SACHS 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 GOLDMAN SACHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOLDMAN SACHS CDR has no effect on the direction of Intact Financial i.e., Intact Financial and GOLDMAN SACHS go up and down completely randomly.
Pair Corralation between Intact Financial and GOLDMAN SACHS
Assuming the 90 days trading horizon Intact Financial is expected to generate 6.28 times less return on investment than GOLDMAN SACHS. But when comparing it to its historical volatility, Intact Financial Corp is 3.4 times less risky than GOLDMAN SACHS. It trades about 0.1 of its potential returns per unit of risk. GOLDMAN SACHS CDR is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,358 in GOLDMAN SACHS CDR on September 12, 2024 and sell it today you would earn a total of 591.00 from holding GOLDMAN SACHS CDR or generate 25.06% 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. GOLDMAN SACHS CDR
Performance |
| Timeline |
| Intact Financial Corp |
| GOLDMAN SACHS CDR |
Intact Financial and GOLDMAN SACHS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intact Financial and GOLDMAN SACHS
The main advantage of trading using opposite Intact Financial and GOLDMAN SACHS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intact Financial position performs unexpectedly, GOLDMAN SACHS 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 GOLDMAN SACHS will offset losses from the drop in GOLDMAN SACHS'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 |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |