Correlation Between Madison Pacific and Intact Financial
Can any of the company-specific risk be diversified away by investing in both Madison Pacific 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 Madison Pacific and Intact Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Madison Pacific Properties and Intact Financial Corp, you can compare the effects of market volatilities on Madison Pacific 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 Madison Pacific with a short position of Intact Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Madison Pacific and Intact Financial.
Diversification Opportunities for Madison Pacific and Intact Financial
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Madison and Intact is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Madison Pacific Properties 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 Madison Pacific 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 Madison Pacific Properties 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 Madison Pacific i.e., Madison Pacific and Intact Financial go up and down completely randomly.
Pair Corralation between Madison Pacific and Intact Financial
Assuming the 90 days trading horizon Madison Pacific Properties is expected to under-perform the Intact Financial. In addition to that, Madison Pacific is 2.49 times more volatile than Intact Financial Corp. It trades about -0.03 of its total potential returns per unit of risk. Intact Financial Corp is currently generating about 0.04 per unit of volatility. If you would invest 2,330 in Intact Financial Corp on August 30, 2024 and sell it today you would earn a total of 111.00 from holding Intact Financial Corp or generate 4.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Madison Pacific Properties vs. Intact Financial Corp
Performance |
| Timeline |
| Madison Pacific Prop |
| Intact Financial Corp |
Madison Pacific and Intact Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Madison Pacific and Intact Financial
The main advantage of trading using opposite Madison Pacific and Intact Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Madison Pacific 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.| Madison Pacific vs. First National Financial | Madison Pacific vs. Canso Credit Trust | Madison Pacific vs. East Side Games | Madison Pacific vs. Income Financial Trust |
| Intact Financial vs. Intact Financial Corp | Intact Financial vs. National Bank of | Intact Financial vs. Fairfax Financial Holdings | Intact Financial vs. Fairfax Financial Holdings |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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