Correlation Between Canaf Investments and IGM Financial
Can any of the company-specific risk be diversified away by investing in both Canaf Investments and IGM 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 Canaf Investments and IGM Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canaf Investments and IGM Financial, you can compare the effects of market volatilities on Canaf Investments and IGM 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 Canaf Investments with a short position of IGM Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canaf Investments and IGM Financial.
Diversification Opportunities for Canaf Investments and IGM Financial
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Canaf and IGM is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Canaf Investments and IGM Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGM Financial and Canaf Investments 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 Canaf Investments are associated (or correlated) with IGM Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IGM Financial has no effect on the direction of Canaf Investments i.e., Canaf Investments and IGM Financial go up and down completely randomly.
Pair Corralation between Canaf Investments and IGM Financial
Assuming the 90 days horizon Canaf Investments is expected to under-perform the IGM Financial. In addition to that, Canaf Investments is 3.73 times more volatile than IGM Financial. It trades about -0.07 of its total potential returns per unit of risk. IGM Financial is currently generating about 0.51 per unit of volatility. If you would invest 4,233 in IGM Financial on September 4, 2024 and sell it today you would earn a total of 467.00 from holding IGM Financial or generate 11.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Canaf Investments vs. IGM Financial
Performance |
| Timeline |
| Canaf Investments |
| IGM Financial |
Canaf Investments and IGM Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canaf Investments and IGM Financial
The main advantage of trading using opposite Canaf Investments and IGM Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canaf Investments position performs unexpectedly, IGM 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 IGM Financial will offset losses from the drop in IGM Financial's long position.| Canaf Investments vs. First Majestic Silver | Canaf Investments vs. Ivanhoe Energy | Canaf Investments vs. Orezone Gold Corp | Canaf Investments vs. Faraday Copper Corp |
| IGM Financial vs. CI Financial Corp | IGM Financial vs. Great West Lifeco | IGM Financial vs. iA Financial | IGM Financial vs. Power |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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