Correlation Between Intact Financial and Diversified Royalty
Can any of the company-specific risk be diversified away by investing in both Intact Financial and Diversified Royalty 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 Diversified Royalty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intact Financial and Diversified Royalty Corp, you can compare the effects of market volatilities on Intact Financial and Diversified Royalty 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 Diversified Royalty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intact Financial and Diversified Royalty.
Diversification Opportunities for Intact Financial and Diversified Royalty
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Intact and Diversified is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Intact Financial and Diversified Royalty Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diversified Royalty Corp 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 are associated (or correlated) with Diversified Royalty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diversified Royalty Corp has no effect on the direction of Intact Financial i.e., Intact Financial and Diversified Royalty go up and down completely randomly.
Pair Corralation between Intact Financial and Diversified Royalty
Assuming the 90 days trading horizon Intact Financial is expected to generate 0.95 times more return on investment than Diversified Royalty. However, Intact Financial is 1.05 times less risky than Diversified Royalty. It trades about 0.08 of its potential returns per unit of risk. Diversified Royalty Corp is currently generating about 0.04 per unit of risk. If you would invest 19,118 in Intact Financial on September 12, 2024 and sell it today you would earn a total of 7,830 from holding Intact Financial or generate 40.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intact Financial vs. Diversified Royalty Corp
Performance |
| Timeline |
| Intact Financial |
| Diversified Royalty Corp |
Intact Financial and Diversified Royalty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intact Financial and Diversified Royalty
The main advantage of trading using opposite Intact Financial and Diversified Royalty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intact Financial position performs unexpectedly, Diversified Royalty 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 Diversified Royalty will offset losses from the drop in Diversified Royalty's long position.| Intact Financial vs. Brompton Lifeco Split | Intact Financial vs. North American Financial | Intact Financial vs. Prime Dividend Corp | Intact Financial vs. Financial 15 Split |
| Diversified Royalty vs. True North Commercial | Diversified Royalty vs. Chemtrade Logistics Income | Diversified Royalty vs. Pizza Pizza Royalty | Diversified Royalty vs. Exchange Income |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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