Correlation Between Intact Financial and Laramide Resources
Can any of the company-specific risk be diversified away by investing in both Intact Financial and Laramide Resources 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 Laramide Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intact Financial and Laramide Resources, you can compare the effects of market volatilities on Intact Financial and Laramide Resources 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 Laramide Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intact Financial and Laramide Resources.
Diversification Opportunities for Intact Financial and Laramide Resources
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Intact and Laramide is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Intact Financial and Laramide Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laramide Resources 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 Laramide Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laramide Resources has no effect on the direction of Intact Financial i.e., Intact Financial and Laramide Resources go up and down completely randomly.
Pair Corralation between Intact Financial and Laramide Resources
Assuming the 90 days trading horizon Intact Financial is expected to generate 2.53 times less return on investment than Laramide Resources. But when comparing it to its historical volatility, Intact Financial is 4.25 times less risky than Laramide Resources. It trades about 0.07 of its potential returns per unit of risk. Laramide Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 47.00 in Laramide Resources on September 2, 2024 and sell it today you would earn a total of 25.00 from holding Laramide Resources or generate 53.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intact Financial vs. Laramide Resources
Performance |
| Timeline |
| Intact Financial |
| Laramide Resources |
Intact Financial and Laramide Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intact Financial and Laramide Resources
The main advantage of trading using opposite Intact Financial and Laramide Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intact Financial position performs unexpectedly, Laramide Resources 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 Laramide Resources will offset losses from the drop in Laramide Resources' long position.| Intact Financial vs. iA Financial | Intact Financial vs. Thomson Reuters Corp | Intact Financial vs. Metro Inc | Intact Financial vs. Waste Connections |
| Laramide Resources vs. Mega Uranium | Laramide Resources vs. Forsys Metals Corp | Laramide Resources vs. Pinetree Capital | Laramide Resources vs. Ur 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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