Correlation Between IGM Financial and HPQ Silicon
Can any of the company-specific risk be diversified away by investing in both IGM Financial and HPQ Silicon 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 HPQ Silicon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IGM Financial and HPQ Silicon Resources, you can compare the effects of market volatilities on IGM Financial and HPQ Silicon 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 HPQ Silicon. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGM Financial and HPQ Silicon.
Diversification Opportunities for IGM Financial and HPQ Silicon
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IGM and HPQ is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding IGM Financial and HPQ Silicon Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HPQ Silicon Resources 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 HPQ Silicon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HPQ Silicon Resources has no effect on the direction of IGM Financial i.e., IGM Financial and HPQ Silicon go up and down completely randomly.
Pair Corralation between IGM Financial and HPQ Silicon
Assuming the 90 days trading horizon IGM Financial is expected to generate 0.29 times more return on investment than HPQ Silicon. However, IGM Financial is 3.47 times less risky than HPQ Silicon. It trades about 0.05 of its potential returns per unit of risk. HPQ Silicon Resources is currently generating about 0.01 per unit of risk. If you would invest 3,565 in IGM Financial on September 30, 2024 and sell it today you would earn a total of 1,111 from holding IGM Financial or generate 31.16% 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. HPQ Silicon Resources
Performance |
| Timeline |
| IGM Financial |
| HPQ Silicon Resources |
IGM Financial and HPQ Silicon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IGM Financial and HPQ Silicon
The main advantage of trading using opposite IGM Financial and HPQ Silicon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGM Financial position performs unexpectedly, HPQ Silicon 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 HPQ Silicon will offset losses from the drop in HPQ Silicon's long position.| IGM Financial vs. Berkshire Hathaway CDR | IGM Financial vs. JPMorgan Chase Co | IGM Financial vs. Bank of America | IGM Financial vs. Alphabet Inc CDR |
| HPQ Silicon vs. Monarca Minerals | HPQ Silicon vs. Outcrop Gold Corp | HPQ Silicon vs. Grande Portage Resources | HPQ Silicon vs. Klondike Silver Corp |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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