Correlation Between Intact Financial and Canadian Utilities

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

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

Diversification Opportunities for Intact Financial and Canadian Utilities

-0.37

Correlation Coefficient

Intact Financial  Canadian Utilities

Very good diversification

The 3 months correlation between Intact and Canadian is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Intact Financial and Canadian Utilities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities 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 Canadian Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Utilities has no effect on the direction of Intact Financial i.e., Intact Financial and Canadian Utilities go up and down completely randomly.

Pair Corralation between Intact Financial and Canadian Utilities

Assuming the 90 days trading horizon Intact Financial is expected to under-perform the Canadian Utilities. In addition to that, Intact Financial is 1.87 times more volatile than Canadian Utilities Limited. It trades about -0.1 of its total potential returns per unit of risk. Canadian Utilities Limited is currently generating about 0.09 per unit of volatility. If you would invest  3,695  in Canadian Utilities Limited on May 19, 2025 and sell it today you would earn a total of  127.00  from holding Canadian Utilities Limited or generate 3.44% return on investment over 90 days.

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

Intact Financial  vs.  Canadian Utilities Limited

Intact Financial

Risk-Adjusted Performance

Weakest

Over the last 90 days Intact Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Canadian Utilities

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Utilities Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Canadian Utilities is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Intact Financial and Canadian Utilities

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

The idea behind Intact Financial and Canadian Utilities Limited 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.