Correlation Between Laurentian Bank and Intact Financial
Can any of the company-specific risk be diversified away by investing in both Laurentian Bank and Intact Financial 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 Laurentian Bank and Intact Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laurentian Bank and Intact Financial Corp, you can compare the effects of market volatilities on Laurentian Bank and Intact Financial 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 Laurentian Bank with a short position of Intact Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laurentian Bank and Intact Financial.
Diversification Opportunities for Laurentian Bank and Intact Financial
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Laurentian and Intact is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Laurentian Bank and Intact Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intact Financial Corp and Laurentian Bank 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 Laurentian Bank are associated (or correlated) with Intact Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intact Financial Corp has no effect on the direction of Laurentian Bank i.e., Laurentian Bank and Intact Financial go up and down completely randomly.
Pair Corralation between Laurentian Bank and Intact Financial
Assuming the 90 days horizon Laurentian Bank is expected to generate 1.46 times more return on investment than Intact Financial. However, Laurentian Bank is 1.46 times more volatile than Intact Financial Corp. It trades about 0.12 of its potential returns per unit of risk. Intact Financial Corp is currently generating about 0.05 per unit of risk. If you would invest 2,408 in Laurentian Bank on August 29, 2024 and sell it today you would earn a total of 531.00 from holding Laurentian Bank or generate 22.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Laurentian Bank vs. Intact Financial Corp
Performance |
| Timeline |
| Laurentian Bank |
| Intact Financial Corp |
Laurentian Bank and Intact Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Laurentian Bank and Intact Financial
The main advantage of trading using opposite Laurentian Bank and Intact Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laurentian Bank position performs unexpectedly, Intact Financial 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 Intact Financial will offset losses from the drop in Intact Financial's long position.| Laurentian Bank vs. Canadian Western Bank | Laurentian Bank vs. National Bank of | Laurentian Bank vs. Canadian Imperial Bank | Laurentian Bank vs. Great West Lifeco |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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