Correlation Between Nickel Creek and Intact Financial
Can any of the company-specific risk be diversified away by investing in both Nickel Creek 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 Nickel Creek and Intact Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nickel Creek Platinum and Intact Financial, you can compare the effects of market volatilities on Nickel Creek 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 Nickel Creek with a short position of Intact Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nickel Creek and Intact Financial.
Diversification Opportunities for Nickel Creek and Intact Financial
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nickel and Intact is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Nickel Creek Platinum and Intact Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intact Financial and Nickel Creek 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 Nickel Creek Platinum 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 has no effect on the direction of Nickel Creek i.e., Nickel Creek and Intact Financial go up and down completely randomly.
Pair Corralation between Nickel Creek and Intact Financial
Assuming the 90 days trading horizon Nickel Creek Platinum is expected to generate 15.35 times more return on investment than Intact Financial. However, Nickel Creek is 15.35 times more volatile than Intact Financial. It trades about 0.04 of its potential returns per unit of risk. Intact Financial is currently generating about 0.08 per unit of risk. If you would invest 600.00 in Nickel Creek Platinum on August 27, 2024 and sell it today you would lose (516.00) from holding Nickel Creek Platinum or give up 86.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nickel Creek Platinum vs. Intact Financial
Performance |
| Timeline |
| Nickel Creek Platinum |
| Intact Financial |
Nickel Creek and Intact Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nickel Creek and Intact Financial
The main advantage of trading using opposite Nickel Creek and Intact Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nickel Creek 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.The idea behind Nickel Creek Platinum and Intact Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Intact Financial vs. iA Financial | Intact Financial vs. Thomson Reuters Corp | Intact Financial vs. Metro Inc | Intact Financial vs. Waste Connections |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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