Correlation Between IGM Financial and Eddy Smart
Can any of the company-specific risk be diversified away by investing in both IGM Financial and Eddy Smart 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 Eddy Smart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IGM Financial and Eddy Smart Home, you can compare the effects of market volatilities on IGM Financial and Eddy Smart 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 Eddy Smart. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGM Financial and Eddy Smart.
Diversification Opportunities for IGM Financial and Eddy Smart
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IGM and Eddy is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding IGM Financial and Eddy Smart Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eddy Smart Home 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 Eddy Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eddy Smart Home has no effect on the direction of IGM Financial i.e., IGM Financial and Eddy Smart go up and down completely randomly.
Pair Corralation between IGM Financial and Eddy Smart
Assuming the 90 days trading horizon IGM Financial is expected to under-perform the Eddy Smart. But the stock apears to be less risky and, when comparing its historical volatility, IGM Financial is 6.99 times less risky than Eddy Smart. The stock trades about -0.16 of its potential returns per unit of risk. The Eddy Smart Home is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 240.00 in Eddy Smart Home on October 12, 2024 and sell it today you would earn a total of 85.00 from holding Eddy Smart Home or generate 35.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IGM Financial vs. Eddy Smart Home
Performance |
| Timeline |
| IGM Financial |
| Eddy Smart Home |
IGM Financial and Eddy Smart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IGM Financial and Eddy Smart
The main advantage of trading using opposite IGM Financial and Eddy Smart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGM Financial position performs unexpectedly, Eddy Smart 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 Eddy Smart will offset losses from the drop in Eddy Smart's long position.| IGM Financial vs. CI Financial Corp | IGM Financial vs. Great West Lifeco | IGM Financial vs. iA Financial | IGM Financial vs. Power |
| Eddy Smart vs. Simply Better Brands | Eddy Smart vs. Forward Water Technologies | Eddy Smart vs. Pulse Oil Corp | Eddy Smart vs. C3 Metals |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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