Correlation Between IGM Financial and Dow Jones
Can any of the company-specific risk be diversified away by investing in both IGM Financial and Dow Jones 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 IGM Financial and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IGM Financial and Dow Jones Industrial, you can compare the effects of market volatilities on IGM Financial and Dow Jones 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 IGM Financial with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGM Financial and Dow Jones.
Diversification Opportunities for IGM Financial and Dow Jones
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IGM and Dow is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding IGM Financial and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and IGM 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 IGM Financial are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of IGM Financial i.e., IGM Financial and Dow Jones go up and down completely randomly.
Pair Corralation between IGM Financial and Dow Jones
Assuming the 90 days trading horizon IGM Financial is expected to generate 1.12 times more return on investment than Dow Jones. However, IGM Financial is 1.12 times more volatile than Dow Jones Industrial. It trades about 0.47 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.27 per unit of risk. If you would invest 4,244 in IGM Financial on August 30, 2024 and sell it today you would earn a total of 495.00 from holding IGM Financial or generate 11.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
IGM Financial vs. Dow Jones Industrial
Performance |
| Timeline |
IGM Financial and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
IGM Financial
Pair trading matchups for IGM Financial
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with IGM Financial and Dow Jones
The main advantage of trading using opposite IGM Financial and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGM Financial position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| IGM Financial vs. CI Financial Corp | IGM Financial vs. Great West Lifeco | IGM Financial vs. iA Financial | IGM Financial vs. Power |
| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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