Correlation Between Intact Financial and National Bank

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

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

Diversification Opportunities for Intact Financial and National Bank

0.45

Correlation Coefficient

Intact Financial  National Bank

Very weak diversification

The 3 months correlation between Intact and National is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Intact Financial and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank 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 National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank has no effect on the direction of Intact Financial i.e., Intact Financial and National Bank go up and down completely randomly.

Pair Corralation between Intact Financial and National Bank

Assuming the 90 days trading horizon Intact Financial is expected to generate 3.88 times less return on investment than National Bank. In addition to that, Intact Financial is 1.83 times more volatile than National Bank of. It trades about 0.05 of its total potential returns per unit of risk. National Bank of is currently generating about 0.39 per unit of volatility. If you would invest  14,359  in National Bank of on September 2, 2025 and sell it today you would earn a total of  2,536  from holding National Bank of or generate 17.66% return on investment over 90 days.

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

Intact Financial  vs.  National Bank of

Intact Financial

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Intact Financial are ranked lower than 4 (%) 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 current stock price disarray, may contribute to short-term losses for the investors.

National Bank

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in National Bank of are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, National Bank displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intact Financial and National Bank

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

The idea behind Intact Financial and National Bank of 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 Transaction History module to view history of all your transactions and understand their impact on performance.