Correlation Between IGM Financial and Dominion Lending
Can any of the company-specific risk be diversified away by investing in both IGM Financial and Dominion Lending 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 Dominion Lending into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IGM Financial and Dominion Lending Centres, you can compare the effects of market volatilities on IGM Financial and Dominion Lending 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 Dominion Lending. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGM Financial and Dominion Lending.
Diversification Opportunities for IGM Financial and Dominion Lending
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IGM and Dominion is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding IGM Financial and Dominion Lending Centres in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dominion Lending Centres 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 Dominion Lending. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dominion Lending Centres has no effect on the direction of IGM Financial i.e., IGM Financial and Dominion Lending go up and down completely randomly.
Pair Corralation between IGM Financial and Dominion Lending
Assuming the 90 days trading horizon IGM Financial is expected to generate 3.87 times less return on investment than Dominion Lending. But when comparing it to its historical volatility, IGM Financial is 2.74 times less risky than Dominion Lending. It trades about 0.12 of its potential returns per unit of risk. Dominion Lending Centres is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 268.00 in Dominion Lending Centres on November 3, 2024 and sell it today you would earn a total of 547.00 from holding Dominion Lending Centres or generate 204.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
IGM Financial vs. Dominion Lending Centres
Performance |
| Timeline |
| IGM Financial |
| Dominion Lending Centres |
IGM Financial and Dominion Lending Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IGM Financial and Dominion Lending
The main advantage of trading using opposite IGM Financial and Dominion Lending positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGM Financial position performs unexpectedly, Dominion Lending 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 Dominion Lending will offset losses from the drop in Dominion Lending's long position.| IGM Financial vs. CI Financial Corp | IGM Financial vs. Great West Lifeco | IGM Financial vs. iA Financial | IGM Financial vs. Power |
| Dominion Lending vs. Titanium Transportation Group | Dominion Lending vs. Alignvest Acquisition II | Dominion Lending vs. Propel Holdings | Dominion Lending vs. Dexterra Group |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |