Correlation Between Intact Financial and Canaf Investments

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

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

Diversification Opportunities for Intact Financial and Canaf Investments

0.66

Correlation Coefficient

Intact Financial  Canaf Investments

Poor diversification

The 3 months correlation between Intact and Canaf is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Intact Financial Corp and Canaf Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canaf Investments and Intact Financial 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 Intact Financial Corp are associated (or correlated) with Canaf Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canaf Investments has no effect on the direction of Intact Financial i.e., Intact Financial and Canaf Investments go up and down completely randomly.

Pair Corralation between Intact Financial and Canaf Investments

Assuming the 90 days trading horizon Intact Financial is expected to generate 2.13 times less return on investment than Canaf Investments. But when comparing it to its historical volatility, Intact Financial Corp is 6.39 times less risky than Canaf Investments. It trades about 0.35 of its potential returns per unit of risk. Canaf Investments is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  30.00  in Canaf Investments on April 24, 2025 and sell it today you would earn a total of  7.00  from holding Canaf Investments or generate 23.33% return on investment over 90 days.

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

Intact Financial Corp  vs.  Canaf Investments

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 27 (%) 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.

Canaf Investments

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Canaf Investments are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Canaf Investments showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intact Financial and Canaf Investments

The main advantage of trading using opposite Intact Financial and Canaf Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intact Financial position performs unexpectedly, Canaf Investments 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 Canaf Investments will offset losses from the drop in Canaf Investments' long position.

The idea behind Intact Financial Corp and Canaf Investments 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.