Correlation Between Intact Financial and Pollard Banknote
Can any of the company-specific risk be diversified away by investing in both Intact Financial and Pollard Banknote 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 Pollard Banknote 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 Pollard Banknote Limited, you can compare the effects of market volatilities on Intact Financial and Pollard Banknote 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 Pollard Banknote. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intact Financial and Pollard Banknote.
Diversification Opportunities for Intact Financial and Pollard Banknote
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Intact and Pollard is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Intact Financial Corp and Pollard Banknote Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pollard Banknote 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 Pollard Banknote. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pollard Banknote has no effect on the direction of Intact Financial i.e., Intact Financial and Pollard Banknote go up and down completely randomly.
Pair Corralation between Intact Financial and Pollard Banknote
Assuming the 90 days trading horizon Intact Financial Corp is expected to generate 0.22 times more return on investment than Pollard Banknote. However, Intact Financial Corp is 4.6 times less risky than Pollard Banknote. It trades about 0.04 of its potential returns per unit of risk. Pollard Banknote Limited is currently generating about -0.02 per unit of risk. If you would invest 2,330 in Intact Financial Corp on September 1, 2024 and sell it today you would earn a total of 108.00 from holding Intact Financial Corp or generate 4.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intact Financial Corp vs. Pollard Banknote Limited
Performance |
| Timeline |
| Intact Financial Corp |
| Pollard Banknote |
Intact Financial and Pollard Banknote Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intact Financial and Pollard Banknote
The main advantage of trading using opposite Intact Financial and Pollard Banknote positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intact Financial position performs unexpectedly, Pollard Banknote 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 Pollard Banknote will offset losses from the drop in Pollard Banknote'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 |
| Pollard Banknote vs. TFI International | Pollard Banknote vs. Baylin Technologies | Pollard Banknote vs. Information Services |
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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