Correlation Between Open Text and Intact Financial
Can any of the company-specific risk be diversified away by investing in both Open Text 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 Open Text and Intact Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Open Text Corp and Intact Financial, you can compare the effects of market volatilities on Open Text 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 Open Text with a short position of Intact Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Open Text and Intact Financial.
Diversification Opportunities for Open Text and Intact Financial
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Open and Intact is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Open Text Corp and Intact Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intact Financial and Open Text 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 Open Text Corp 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 Open Text i.e., Open Text and Intact Financial go up and down completely randomly.
Pair Corralation between Open Text and Intact Financial
Assuming the 90 days trading horizon Open Text Corp is expected to under-perform the Intact Financial. In addition to that, Open Text is 3.06 times more volatile than Intact Financial. It trades about -0.14 of its total potential returns per unit of risk. Intact Financial is currently generating about -0.01 per unit of volatility. If you would invest 26,958 in Intact Financial on August 29, 2024 and sell it today you would lose (91.00) from holding Intact Financial or give up 0.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Open Text Corp vs. Intact Financial
Performance |
| Timeline |
| Open Text Corp |
| Intact Financial |
Open Text and Intact Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Open Text and Intact Financial
The main advantage of trading using opposite Open Text and Intact Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Open Text 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.| Open Text vs. NorthWest Healthcare Properties | Open Text vs. Faction Investment Group | Open Text vs. Partners Value Investments | Open Text vs. Nova Leap Health |
| 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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