Correlation Between IGM Financial and South Pacific
Can any of the company-specific risk be diversified away by investing in both IGM Financial and South Pacific 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 South Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IGM Financial and South Pacific Metals, you can compare the effects of market volatilities on IGM Financial and South Pacific 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 South Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGM Financial and South Pacific.
Diversification Opportunities for IGM Financial and South Pacific
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IGM and South is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding IGM Financial and South Pacific Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South Pacific Metals 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 South Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South Pacific Metals has no effect on the direction of IGM Financial i.e., IGM Financial and South Pacific go up and down completely randomly.
Pair Corralation between IGM Financial and South Pacific
Assuming the 90 days trading horizon IGM Financial is expected to under-perform the South Pacific. But the stock apears to be less risky and, when comparing its historical volatility, IGM Financial is 2.08 times less risky than South Pacific. The stock trades about -0.01 of its potential returns per unit of risk. The South Pacific Metals is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest 45.00 in South Pacific Metals on October 25, 2024 and sell it today you would earn a total of 12.00 from holding South Pacific Metals or generate 26.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
IGM Financial vs. South Pacific Metals
Performance |
| Timeline |
| IGM Financial |
| South Pacific Metals |
IGM Financial and South Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IGM Financial and South Pacific
The main advantage of trading using opposite IGM Financial and South Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGM Financial position performs unexpectedly, South Pacific 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 South Pacific will offset losses from the drop in South Pacific's long position.| IGM Financial vs. CI Financial Corp | IGM Financial vs. Great West Lifeco | IGM Financial vs. iA Financial | IGM Financial vs. Power |
| South Pacific vs. Brookfield Investments | South Pacific vs. Bausch Health Companies | South Pacific vs. Nova Leap Health | South Pacific vs. Nano One Materials |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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