Correlation Between IGM Financial and Sparx Technology
Can any of the company-specific risk be diversified away by investing in both IGM Financial and Sparx Technology 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 Sparx Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IGM Financial and Sparx Technology, you can compare the effects of market volatilities on IGM Financial and Sparx Technology 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 Sparx Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGM Financial and Sparx Technology.
Diversification Opportunities for IGM Financial and Sparx Technology
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IGM and Sparx is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding IGM Financial and Sparx Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparx Technology 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 Sparx Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparx Technology has no effect on the direction of IGM Financial i.e., IGM Financial and Sparx Technology go up and down completely randomly.
Pair Corralation between IGM Financial and Sparx Technology
Assuming the 90 days trading horizon IGM Financial is expected to generate 1.64 times less return on investment than Sparx Technology. But when comparing it to its historical volatility, IGM Financial is 3.11 times less risky than Sparx Technology. It trades about 0.39 of its potential returns per unit of risk. Sparx Technology is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 2,492 in Sparx Technology on September 14, 2024 and sell it today you would earn a total of 247.00 from holding Sparx Technology or generate 9.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
IGM Financial vs. Sparx Technology
Performance |
| Timeline |
| IGM Financial |
| Sparx Technology |
IGM Financial and Sparx Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IGM Financial and Sparx Technology
The main advantage of trading using opposite IGM Financial and Sparx Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGM Financial position performs unexpectedly, Sparx Technology 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 Sparx Technology will offset losses from the drop in Sparx Technology's long position.| IGM Financial vs. Berkshire Hathaway CDR | IGM Financial vs. E L Financial Corp | IGM Financial vs. E L Financial 3 | IGM Financial vs. Molson Coors Canada |
| Sparx Technology vs. IGM Financial | Sparx Technology vs. AGF Management Limited | Sparx Technology vs. iA Financial | Sparx Technology vs. Olympia Financial Group |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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