Correlation Between E L and Intact Financial

Can any of the company-specific risk be diversified away by investing in both E L 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 E L and Intact Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between E L Financial Corp and Intact Financial Corp, you can compare the effects of market volatilities on E L 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 E L with a short position of Intact Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of E L and Intact Financial.

Diversification Opportunities for E L and Intact Financial

0.87

Correlation Coefficient

E L  Intact Financial

Very poor diversification

The 3 months correlation between ELF-PF and Intact is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding E L Financial Corp 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 E L 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 E L Financial 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 Corp has no effect on the direction of E L i.e., E L and Intact Financial go up and down completely randomly.

Pair Corralation between E L and Intact Financial

Assuming the 90 days trading horizon E L is expected to generate 1.77 times less return on investment than Intact Financial. But when comparing it to its historical volatility, E L Financial Corp is 1.12 times less risky than Intact Financial. It trades about 0.23 of its potential returns per unit of risk. Intact Financial Corp is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  2,255  in Intact Financial Corp on April 23, 2025 and sell it today you would earn a total of  280.00  from holding Intact Financial Corp or generate 12.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

E L Financial Corp  vs.  Intact Financial Corp

E L Financial

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in E L Financial Corp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal technical and fundamental indicators, E L may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Intact Financial Corp

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Intact Financial Corp are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Intact Financial may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with E L and Intact Financial

The main advantage of trading using opposite E L and Intact Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E L 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.

The idea behind E L Financial Corp and Intact Financial Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.