Correlation Between Microsoft and Intact Financial
Can any of the company-specific risk be diversified away by investing in both Microsoft 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 Microsoft and Intact Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Intact Financial Corp, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of Intact Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Intact Financial.
Diversification Opportunities for Microsoft and Intact Financial
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and Intact is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft 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 Microsoft 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 Microsoft 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 Microsoft i.e., Microsoft and Intact Financial go up and down completely randomly.
Pair Corralation between Microsoft and Intact Financial
Given the investment horizon of 90 days Microsoft is expected to generate 1.78 times less return on investment than Intact Financial. In addition to that, Microsoft is 2.98 times more volatile than Intact Financial Corp. It trades about 0.02 of its total potential returns per unit of risk. Intact Financial Corp is currently generating about 0.12 per unit of volatility. If you would invest 2,405 in Intact Financial Corp on August 28, 2024 and sell it today you would earn a total of 36.00 from holding Intact Financial Corp or generate 1.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Intact Financial Corp
Performance |
| Timeline |
| Microsoft |
| Intact Financial Corp |
Microsoft and Intact Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Intact Financial
The main advantage of trading using opposite Microsoft and Intact Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
| 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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