Correlation Between Intact Financial and Rubicon Organics

Can any of the company-specific risk be diversified away by investing in both Intact Financial and Rubicon Organics 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 Rubicon Organics 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 Rubicon Organics, you can compare the effects of market volatilities on Intact Financial and Rubicon Organics 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 Rubicon Organics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intact Financial and Rubicon Organics.

Diversification Opportunities for Intact Financial and Rubicon Organics

-0.23

Correlation Coefficient

Intact Financial  Rubicon Organics

Very good diversification

The 3 months correlation between Intact and Rubicon is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Intact Financial Corp and Rubicon Organics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rubicon Organics 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 Rubicon Organics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rubicon Organics has no effect on the direction of Intact Financial i.e., Intact Financial and Rubicon Organics go up and down completely randomly.

Pair Corralation between Intact Financial and Rubicon Organics

Assuming the 90 days trading horizon Intact Financial Corp is expected to generate 0.17 times more return on investment than Rubicon Organics. However, Intact Financial Corp is 5.87 times less risky than Rubicon Organics. It trades about 0.04 of its potential returns per unit of risk. Rubicon Organics is currently generating about 0.0 per unit of risk. If you would invest  1,914  in Intact Financial Corp on March 29, 2024 and sell it today you would earn a total of  382.00  from holding Intact Financial Corp or generate 19.96% return on investment over 90 days.

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

Intact Financial Corp  vs.  Rubicon Organics

Intact Financial Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intact Financial Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Intact Financial may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Rubicon Organics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rubicon Organics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating primary indicators, Rubicon Organics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intact Financial and Rubicon Organics

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

The idea behind Intact Financial Corp and Rubicon Organics 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.