Correlation Between IGM Financial and Nutrien
Can any of the company-specific risk be diversified away by investing in both IGM Financial and Nutrien 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 Nutrien into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IGM Financial and Nutrien, you can compare the effects of market volatilities on IGM Financial and Nutrien 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 Nutrien. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGM Financial and Nutrien.
Diversification Opportunities for IGM Financial and Nutrien
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between IGM and Nutrien is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding IGM Financial and Nutrien in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nutrien 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 Nutrien. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nutrien has no effect on the direction of IGM Financial i.e., IGM Financial and Nutrien go up and down completely randomly.
Pair Corralation between IGM Financial and Nutrien
Assuming the 90 days trading horizon IGM Financial is expected to under-perform the Nutrien. But the stock apears to be less risky and, when comparing its historical volatility, IGM Financial is 1.32 times less risky than Nutrien. The stock trades about -0.06 of its potential returns per unit of risk. The Nutrien is currently generating about 0.54 of returns per unit of risk over similar time horizon. If you would invest 6,341 in Nutrien on October 25, 2024 and sell it today you would earn a total of 1,226 from holding Nutrien or generate 19.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IGM Financial vs. Nutrien
Performance |
| Timeline |
| IGM Financial |
| Nutrien |
IGM Financial and Nutrien Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IGM Financial and Nutrien
The main advantage of trading using opposite IGM Financial and Nutrien positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGM Financial position performs unexpectedly, Nutrien 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 Nutrien will offset losses from the drop in Nutrien's long position.| IGM Financial vs. CI Financial Corp | IGM Financial vs. Great West Lifeco | IGM Financial vs. iA Financial | IGM Financial vs. Power |
| Nutrien vs. Maple Peak Investments | Nutrien vs. Western Investment | Nutrien vs. Upstart Investments | Nutrien vs. IGM Financial |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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