Correlation Between First National and Intact Financial

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

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

Diversification Opportunities for First National and Intact Financial

0.88

Correlation Coefficient

First National  Intact Financial

Very poor diversification

The 3 months correlation between First and Intact is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding First National Financial 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 First National 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 First National Financial 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 First National i.e., First National and Intact Financial go up and down completely randomly.

Pair Corralation between First National and Intact Financial

Assuming the 90 days trading horizon First National Financial is expected to generate 2.49 times more return on investment than Intact Financial. However, First National is 2.49 times more volatile than Intact Financial Corp. It trades about 0.16 of its potential returns per unit of risk. Intact Financial Corp is currently generating about 0.38 per unit of risk. If you would invest  1,452  in First National Financial on April 20, 2025 and sell it today you would earn a total of  193.00  from holding First National Financial or generate 13.29% return on investment over 90 days.

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

First National Financial  vs.  Intact Financial Corp

First National Financial

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First National Financial are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, First National unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 30 (%) 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 First National and Intact Financial

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

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.