Correlation Between Walmart and IGM Financial
Can any of the company-specific risk be diversified away by investing in both Walmart 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 Walmart and IGM Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart Inc CDR and IGM Financial, you can compare the effects of market volatilities on Walmart 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 Walmart with a short position of IGM Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and IGM Financial.
Diversification Opportunities for Walmart and IGM Financial
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Walmart and IGM is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and IGM Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGM Financial and Walmart 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 Walmart Inc CDR 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 Walmart i.e., Walmart and IGM Financial go up and down completely randomly.
Pair Corralation between Walmart and IGM Financial
Assuming the 90 days trading horizon Walmart Inc CDR is expected to generate 0.91 times more return on investment than IGM Financial. However, Walmart Inc CDR is 1.1 times less risky than IGM Financial. It trades about 0.17 of its potential returns per unit of risk. IGM Financial is currently generating about 0.12 per unit of risk. If you would invest 3,562 in Walmart Inc CDR on October 22, 2024 and sell it today you would earn a total of 422.00 from holding Walmart Inc CDR or generate 11.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart Inc CDR vs. IGM Financial
Performance |
| Timeline |
| Walmart Inc CDR |
| IGM Financial |
Walmart and IGM Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and IGM Financial
The main advantage of trading using opposite Walmart and IGM Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart 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.| Walmart vs. Sparx Technology | Walmart vs. Big Rock Brewery | Walmart vs. Chemtrade Logistics Income | Walmart vs. Exco Technologies Limited |
| IGM Financial vs. CI Financial Corp | IGM Financial vs. Great West Lifeco | IGM Financial vs. iA Financial | IGM Financial vs. Power |
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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