Correlation Between Solution Financial and IGM Financial
Can any of the company-specific risk be diversified away by investing in both Solution Financial and IGM Financial 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 Solution Financial and IGM Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solution Financial and IGM Financial, you can compare the effects of market volatilities on Solution Financial and IGM Financial 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 Solution Financial with a short position of IGM Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solution Financial and IGM Financial.
Diversification Opportunities for Solution Financial and IGM Financial
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Solution and IGM is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Solution Financial and IGM Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGM Financial and Solution 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 Solution Financial are associated (or correlated) with IGM Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IGM Financial has no effect on the direction of Solution Financial i.e., Solution Financial and IGM Financial go up and down completely randomly.
Pair Corralation between Solution Financial and IGM Financial
Assuming the 90 days trading horizon Solution Financial is expected to generate 1.78 times less return on investment than IGM Financial. In addition to that, Solution Financial is 2.71 times more volatile than IGM Financial. It trades about 0.02 of its total potential returns per unit of risk. IGM Financial is currently generating about 0.12 per unit of volatility. If you would invest 3,376 in IGM Financial on September 20, 2024 and sell it today you would earn a total of 1,176 from holding IGM Financial or generate 34.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solution Financial vs. IGM Financial
Performance |
| Timeline |
| Solution Financial |
| IGM Financial |
Solution Financial and IGM Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solution Financial and IGM Financial
The main advantage of trading using opposite Solution Financial and IGM Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solution Financial position performs unexpectedly, IGM Financial 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 IGM Financial will offset losses from the drop in IGM Financial's long position.| Solution Financial vs. Profound Medical Corp | Solution Financial vs. Constellation Software | Solution Financial vs. Converge Technology Solutions | Solution Financial vs. Diamond Estates Wines |
| 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 |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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