Correlation Between Intact Financial and Pembina Pipeline

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

Diversification Opportunities for Intact Financial and Pembina Pipeline

-0.7

Correlation Coefficient

Intact Financial  Pembina Pipeline

Excellent diversification

The 3 months correlation between Intact and Pembina is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Intact Financial Corp and Pembina Pipeline Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pembina Pipeline Corp 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 Pembina Pipeline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pembina Pipeline Corp has no effect on the direction of Intact Financial i.e., Intact Financial and Pembina Pipeline go up and down completely randomly.

Pair Corralation between Intact Financial and Pembina Pipeline

Assuming the 90 days trading horizon Intact Financial Corp is expected to generate 0.36 times more return on investment than Pembina Pipeline. However, Intact Financial Corp is 2.77 times less risky than Pembina Pipeline. It trades about 0.21 of its potential returns per unit of risk. Pembina Pipeline Corp is currently generating about -0.04 per unit of risk. If you would invest  2,374  in Intact Financial Corp on May 4, 2025 and sell it today you would earn a total of  131.00  from holding Intact Financial Corp or generate 5.52% return on investment over 90 days.

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

Intact Financial Corp  vs.  Pembina Pipeline Corp

Intact Financial Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Intact Financial Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Intact Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pembina Pipeline Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pembina Pipeline Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Pembina Pipeline is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Intact Financial and Pembina Pipeline

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

The idea behind Intact Financial Corp and Pembina Pipeline Corp 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.