Correlation Between IGM Financial and Sonoro Gold
Can any of the company-specific risk be diversified away by investing in both IGM Financial and Sonoro Gold 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 Sonoro Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IGM Financial and Sonoro Gold Corp, you can compare the effects of market volatilities on IGM Financial and Sonoro Gold 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 Sonoro Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGM Financial and Sonoro Gold.
Diversification Opportunities for IGM Financial and Sonoro Gold
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IGM and Sonoro is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding IGM Financial and Sonoro Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonoro Gold Corp 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 Sonoro Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonoro Gold Corp has no effect on the direction of IGM Financial i.e., IGM Financial and Sonoro Gold go up and down completely randomly.
Pair Corralation between IGM Financial and Sonoro Gold
Assuming the 90 days trading horizon IGM Financial is expected to generate 3.32 times less return on investment than Sonoro Gold. But when comparing it to its historical volatility, IGM Financial is 6.4 times less risky than Sonoro Gold. It trades about 0.07 of its potential returns per unit of risk. Sonoro Gold Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 9.50 in Sonoro Gold Corp on September 12, 2024 and sell it today you would lose (0.50) from holding Sonoro Gold Corp or give up 5.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
IGM Financial vs. Sonoro Gold Corp
Performance |
| Timeline |
| IGM Financial |
| Sonoro Gold Corp |
IGM Financial and Sonoro Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IGM Financial and Sonoro Gold
The main advantage of trading using opposite IGM Financial and Sonoro Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGM Financial position performs unexpectedly, Sonoro Gold 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 Sonoro Gold will offset losses from the drop in Sonoro Gold's long position.| IGM Financial vs. Brompton Lifeco Split | IGM Financial vs. North American Financial | IGM Financial vs. Prime Dividend Corp | IGM Financial vs. Financial 15 Split |
| Sonoro Gold vs. Westshore Terminals Investment | Sonoro Gold vs. CNJ Capital Investments | Sonoro Gold vs. IGM Financial | Sonoro Gold vs. Definity Financial 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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