Correlation Between Intact Financial and Liberty Gold

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

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

Diversification Opportunities for Intact Financial and Liberty Gold

-0.59

Correlation Coefficient

Intact Financial  Liberty Gold

Excellent diversification

The 3 months correlation between Intact and Liberty is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Intact Financial and Liberty Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Gold 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 are associated (or correlated) with Liberty Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Gold Corp has no effect on the direction of Intact Financial i.e., Intact Financial and Liberty Gold go up and down completely randomly.

Pair Corralation between Intact Financial and Liberty Gold

Assuming the 90 days trading horizon Intact Financial is expected to generate 0.23 times more return on investment than Liberty Gold. However, Intact Financial is 4.36 times less risky than Liberty Gold. It trades about 0.11 of its potential returns per unit of risk. Liberty Gold Corp is currently generating about -0.09 per unit of risk. If you would invest  25,316  in Intact Financial on September 13, 2024 and sell it today you would earn a total of  1,616  from holding Intact Financial or generate 6.38% return on investment over 90 days.

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

Intact Financial  vs.  Liberty Gold Corp

Intact Financial

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intact Financial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Intact Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Liberty Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Liberty Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Intact Financial and Liberty Gold

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

The idea behind Intact Financial and Liberty Gold 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.