Correlation Between Rocky Mountain and Intact Financial
Can any of the company-specific risk be diversified away by investing in both Rocky Mountain 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 Rocky Mountain and Intact Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rocky Mountain Liquor and Intact Financial Corp, you can compare the effects of market volatilities on Rocky Mountain 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 Rocky Mountain with a short position of Intact Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rocky Mountain and Intact Financial.
Diversification Opportunities for Rocky Mountain and Intact Financial
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Rocky and Intact is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Rocky Mountain Liquor 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 Rocky Mountain 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 Rocky Mountain Liquor 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 Rocky Mountain i.e., Rocky Mountain and Intact Financial go up and down completely randomly.
Pair Corralation between Rocky Mountain and Intact Financial
Assuming the 90 days horizon Rocky Mountain Liquor is expected to generate 5.34 times more return on investment than Intact Financial. However, Rocky Mountain is 5.34 times more volatile than Intact Financial Corp. It trades about 0.04 of its potential returns per unit of risk. Intact Financial Corp is currently generating about 0.05 per unit of risk. If you would invest 12.00 in Rocky Mountain Liquor on September 2, 2024 and sell it today you would earn a total of 1.00 from holding Rocky Mountain Liquor or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rocky Mountain Liquor vs. Intact Financial Corp
Performance |
| Timeline |
| Rocky Mountain Liquor |
| Intact Financial Corp |
Rocky Mountain and Intact Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rocky Mountain and Intact Financial
The main advantage of trading using opposite Rocky Mountain and Intact Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rocky Mountain 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.| Rocky Mountain vs. DelphX Capital Markets | Rocky Mountain vs. Citadel Income | Rocky Mountain vs. iShares Canadian HYBrid | Rocky Mountain vs. Altagas Cum Red |
| Intact Financial vs. Fairfax Financial Holdings | Intact Financial vs. iShares Canadian HYBrid | Intact Financial vs. Brompton European Dividend | Intact Financial vs. Solar Alliance Energy |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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