Correlation Between Intact Financial and VentriPoint Diagnostics

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

Diversification Opportunities for Intact Financial and VentriPoint Diagnostics

-0.46

Correlation Coefficient

Intact Financial  VentriPoint Diagnostics

Very good diversification

The 3 months correlation between Intact and VentriPoint is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Intact Financial Corp and VentriPoint Diagnostics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VentriPoint Diagnostics 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 VentriPoint Diagnostics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VentriPoint Diagnostics has no effect on the direction of Intact Financial i.e., Intact Financial and VentriPoint Diagnostics go up and down completely randomly.

Pair Corralation between Intact Financial and VentriPoint Diagnostics

Assuming the 90 days trading horizon Intact Financial is expected to generate 1.16 times less return on investment than VentriPoint Diagnostics. But when comparing it to its historical volatility, Intact Financial Corp is 5.72 times less risky than VentriPoint Diagnostics. It trades about 0.07 of its potential returns per unit of risk. VentriPoint Diagnostics is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  28.00  in VentriPoint Diagnostics on June 18, 2024 and sell it today you would lose (8.00) from holding VentriPoint Diagnostics or give up 28.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Intact Financial Corp  vs.  VentriPoint Diagnostics

Intact Financial Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Intact Financial Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental indicators, Intact Financial may actually be approaching a critical reversion point that can send shares even higher in October 2024.

VentriPoint Diagnostics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VentriPoint Diagnostics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, VentriPoint Diagnostics is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Intact Financial and VentriPoint Diagnostics

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

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