Correlation Between Intact Financial and International Business

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

By analyzing existing cross correlation between Intact Financial and International Business Machines, you can compare the effects of market volatilities on Intact Financial and International Business 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 International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intact Financial and International Business.

Diversification Opportunities for Intact Financial and International Business

0.64

Correlation Coefficient

Intact Financial  International Business

Poor diversification

The 3 months correlation between Intact and International is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Intact Financial and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business 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 are associated (or correlated) with International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of Intact Financial i.e., Intact Financial and International Business go up and down completely randomly.

Pair Corralation between Intact Financial and International Business

Assuming the 90 days trading horizon Intact Financial is expected to generate 8.63 times less return on investment than International Business. But when comparing it to its historical volatility, Intact Financial is 1.43 times less risky than International Business. It trades about 0.03 of its potential returns per unit of risk. International Business Machines is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  3,717  in International Business Machines on April 23, 2025 and sell it today you would earn a total of  583.00  from holding International Business Machines or generate 15.68% return on investment over 90 days.

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

Intact Financial  vs.  International Business Machine

Intact Financial

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intact Financial are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Intact Financial is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

International Business

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, International Business displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intact Financial and International Business

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

The idea behind Intact Financial and International Business Machines 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.