Correlation Between Alfi and Intact Financial

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Can any of the company-specific risk be diversified away by investing in both Alfi and Intact Financial 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 Alfi and Intact Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alfi Inc and Intact Financial, you can compare the effects of market volatilities on Alfi and Intact Financial 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 Alfi with a short position of Intact Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfi and Intact Financial.

Diversification Opportunities for Alfi and Intact Financial

0.08
  Correlation Coefficient

Significant diversification

The 3 months correlation between Alfi and Intact is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Alfi Inc and Intact Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intact Financial and Alfi 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 Alfi Inc are associated (or correlated) with Intact Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intact Financial has no effect on the direction of Alfi i.e., Alfi and Intact Financial go up and down completely randomly.

Pair Corralation between Alfi and Intact Financial

Considering the 90-day investment horizon Alfi Inc is expected to under-perform the Intact Financial. In addition to that, Alfi is 8.65 times more volatile than Intact Financial. It trades about -0.27 of its total potential returns per unit of risk. Intact Financial is currently generating about 0.01 per unit of volatility. If you would invest  14,909  in Intact Financial on September 4, 2022 and sell it today you would lose (3.00)  from holding Intact Financial or give up 0.02% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy90.48%
ValuesDaily Returns

Alfi Inc  vs.  Intact Financial

 Performance (%) 
       Timeline  
Alfi Inc 
Alfi Performance
0 of 100
Over the last 90 days Alfi Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in January 2023. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Alfi Price Channel

Intact Financial 
Intact Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Intact Financial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Intact Financial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Intact Price Channel

Alfi and Intact Financial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Alfi and Intact Financial

The main advantage of trading using opposite Alfi and Intact Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfi position performs unexpectedly, Intact Financial 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 Intact Financial will offset losses from the drop in Intact Financial's long position.
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The idea behind Alfi Inc and Intact Financial 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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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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