Correlation Between Finning International and IGM Financial
Can any of the company-specific risk be diversified away by investing in both Finning International 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 Finning International and IGM Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finning International and IGM Financial, you can compare the effects of market volatilities on Finning International 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 Finning International with a short position of IGM Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finning International and IGM Financial.
Diversification Opportunities for Finning International and IGM Financial
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Finning and IGM is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Finning International and IGM Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGM Financial and Finning International 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 Finning International 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 Finning International i.e., Finning International and IGM Financial go up and down completely randomly.
Pair Corralation between Finning International and IGM Financial
Assuming the 90 days trading horizon Finning International is expected to under-perform the IGM Financial. In addition to that, Finning International is 1.82 times more volatile than IGM Financial. It trades about -0.21 of its total potential returns per unit of risk. IGM Financial is currently generating about 0.38 per unit of volatility. If you would invest 4,058 in IGM Financial on August 29, 2024 and sell it today you would earn a total of 664.00 from holding IGM Financial or generate 16.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Finning International vs. IGM Financial
Performance |
| Timeline |
| Finning International |
| IGM Financial |
Finning International and IGM Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finning International and IGM Financial
The main advantage of trading using opposite Finning International and IGM Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finning International 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.| Finning International vs. Toromont Industries | Finning International vs. Ritchie Bros Auctioneers | Finning International vs. Stantec | Finning International vs. Transcontinental |
| 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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