Correlation Between Thomson Reuters and Intact Financial
Can any of the company-specific risk be diversified away by investing in both Thomson Reuters 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 Thomson Reuters and Intact Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thomson Reuters Corp and Intact Financial, you can compare the effects of market volatilities on Thomson Reuters 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 Thomson Reuters with a short position of Intact Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thomson Reuters and Intact Financial.
Diversification Opportunities for Thomson Reuters and Intact Financial
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Thomson and Intact is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Thomson Reuters Corp and Intact Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intact Financial and Thomson Reuters 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 Thomson Reuters 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 Thomson Reuters i.e., Thomson Reuters and Intact Financial go up and down completely randomly.
Pair Corralation between Thomson Reuters and Intact Financial
Assuming the 90 days trading horizon Thomson Reuters is expected to generate 2.61 times less return on investment than Intact Financial. In addition to that, Thomson Reuters is 1.16 times more volatile than Intact Financial. It trades about 0.04 of its total potential returns per unit of risk. Intact Financial is currently generating about 0.12 per unit of volatility. If you would invest 22,541 in Intact Financial on August 25, 2024 and sell it today you would earn a total of 4,627 from holding Intact Financial or generate 20.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thomson Reuters Corp vs. Intact Financial
Performance |
| Timeline |
| Thomson Reuters Corp |
| Intact Financial |
Thomson Reuters and Intact Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thomson Reuters and Intact Financial
The main advantage of trading using opposite Thomson Reuters and Intact Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thomson Reuters 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.| Thomson Reuters vs. George Weston Limited | Thomson Reuters vs. Waste Connections | Thomson Reuters vs. Saputo Inc | Thomson Reuters vs. Toromont Industries |
| 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |