Correlation Between Intact Financial and Chubb

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

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

Diversification Opportunities for Intact Financial and Chubb

0.63

Correlation Coefficient

Intact Financial  Chubb

Poor diversification

The 3 months correlation between Intact and Chubb is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Intact Financial and Chubb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chubb 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 Chubb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chubb has no effect on the direction of Intact Financial i.e., Intact Financial and Chubb go up and down completely randomly.

Pair Corralation between Intact Financial and Chubb

Assuming the 90 days horizon Intact Financial is expected to generate 0.91 times more return on investment than Chubb. However, Intact Financial is 1.1 times less risky than Chubb. It trades about 0.12 of its potential returns per unit of risk. Chubb is currently generating about 0.06 per unit of risk. If you would invest  17,918  in Intact Financial on January 5, 2025 and sell it today you would earn a total of  1,953  from holding Intact Financial or generate 10.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Intact Financial  vs.  Chubb

Intact Financial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intact Financial are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Intact Financial may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Chubb

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chubb are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Chubb is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Intact Financial and Chubb

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

The idea behind Intact Financial and Chubb 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.