Correlation Between Power Financial and Intact Financial
Can any of the company-specific risk be diversified away by investing in both Power Financial 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 Power Financial and Intact Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Financial 51 and Intact Financial Corp, you can compare the effects of market volatilities on Power Financial 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 Power Financial with a short position of Intact Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Financial and Intact Financial.
Diversification Opportunities for Power Financial and Intact Financial
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Power and Intact is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Power Financial 51 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 Power Financial 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 Power Financial 51 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 Power Financial i.e., Power Financial and Intact Financial go up and down completely randomly.
Pair Corralation between Power Financial and Intact Financial
Assuming the 90 days trading horizon Power Financial 51 is expected to under-perform the Intact Financial. In addition to that, Power Financial is 1.14 times more volatile than Intact Financial Corp. It trades about -0.15 of its total potential returns per unit of risk. Intact Financial Corp is currently generating about -0.17 per unit of volatility. If you would invest 2,243 in Intact Financial Corp on August 29, 2024 and sell it today you would lose (53.00) from holding Intact Financial Corp or give up 2.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power Financial 51 vs. Intact Financial Corp
Performance |
| Timeline |
| Power Financial 51 |
| Intact Financial Corp |
Power Financial and Intact Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Financial and Intact Financial
The main advantage of trading using opposite Power Financial and Intact Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Financial 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.| Power Financial vs. Manulife Financial Corp | Power Financial vs. Great West Lifeco | Power Financial vs. Great West Lifeco |
| Intact Financial vs. Intact Financial Corp | Intact Financial vs. Great West Lifeco | Intact Financial vs. Great Wes 515 | Intact Financial vs. Power Financial Corp |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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