Correlation Between Intact Financial and Mene
Can any of the company-specific risk be diversified away by investing in both Intact Financial and Mene 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 Mene 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 Mene Inc, you can compare the effects of market volatilities on Intact Financial and Mene 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 Mene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intact Financial and Mene.
Diversification Opportunities for Intact Financial and Mene
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Intact and Mene is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Intact Financial Corp and Mene Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mene Inc 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 Mene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mene Inc has no effect on the direction of Intact Financial i.e., Intact Financial and Mene go up and down completely randomly.
Pair Corralation between Intact Financial and Mene
Assuming the 90 days trading horizon Intact Financial is expected to generate 1.82 times less return on investment than Mene. But when comparing it to its historical volatility, Intact Financial Corp is 9.21 times less risky than Mene. It trades about 0.13 of its potential returns per unit of risk. Mene Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 11.00 in Mene Inc on September 2, 2024 and sell it today you would earn a total of 0.00 from holding Mene Inc or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Intact Financial Corp vs. Mene Inc
Performance |
| Timeline |
| Intact Financial Corp |
| Mene Inc |
Intact Financial and Mene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intact Financial and Mene
The main advantage of trading using opposite Intact Financial and Mene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intact Financial position performs unexpectedly, Mene 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 Mene will offset losses from the drop in Mene's long position.| Intact Financial vs. Fairfax Financial Holdings | Intact Financial vs. iShares Canadian HYBrid | Intact Financial vs. Brompton European Dividend | Intact Financial vs. Solar Alliance Energy |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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