Correlation Between Visa and Intact Financial
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and Intact Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Intact Financial Corp, you can compare the effects of market volatilities on Visa 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 Visa with a short position of Intact Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Intact Financial.
Diversification Opportunities for Visa and Intact Financial
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Visa and Intact is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A 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 Visa 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 Visa Class A 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 Visa i.e., Visa and Intact Financial go up and down completely randomly.
Pair Corralation between Visa and Intact Financial
Taking into account the 90-day investment horizon Visa Class A is expected to generate 2.22 times more return on investment than Intact Financial. However, Visa is 2.22 times more volatile than Intact Financial Corp. It trades about 0.34 of its potential returns per unit of risk. Intact Financial Corp is currently generating about 0.12 per unit of risk. If you would invest 28,365 in Visa Class A on August 28, 2024 and sell it today you would earn a total of 2,817 from holding Visa Class A or generate 9.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Intact Financial Corp
Performance |
| Timeline |
| Visa Class A |
| Intact Financial Corp |
Visa and Intact Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Intact Financial
The main advantage of trading using opposite Visa and Intact Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Intact Financial vs. Intact Financial Corp | Intact Financial vs. National Bank of | Intact Financial vs. Fairfax Financial Holdings | Intact Financial vs. Fairfax Financial Holdings |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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