Correlation Between Dundee and IGM Financial
Can any of the company-specific risk be diversified away by investing in both Dundee 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 Dundee and IGM Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dundee and IGM Financial, you can compare the effects of market volatilities on Dundee 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 Dundee with a short position of IGM Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dundee and IGM Financial.
Diversification Opportunities for Dundee and IGM Financial
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Dundee and IGM is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Dundee and IGM Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGM Financial and Dundee 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 Dundee 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 Dundee i.e., Dundee and IGM Financial go up and down completely randomly.
Pair Corralation between Dundee and IGM Financial
Assuming the 90 days trading horizon Dundee is expected to generate 2.87 times more return on investment than IGM Financial. However, Dundee is 2.87 times more volatile than IGM Financial. It trades about 0.01 of its potential returns per unit of risk. IGM Financial is currently generating about -0.03 per unit of risk. If you would invest 134.00 in Dundee on January 24, 2024 and sell it today you would lose (5.00) from holding Dundee or give up 3.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dundee vs. IGM Financial
Performance |
| Timeline |
| Dundee |
| IGM Financial |
Dundee and IGM Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dundee and IGM Financial
The main advantage of trading using opposite Dundee and IGM Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dundee 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.The idea behind Dundee and IGM Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| IGM Financial vs. Canadian Imperial Bank | IGM Financial vs. Fairfax Financial Holdings | IGM Financial vs. Bank of Montreal | IGM Financial vs. Bank of Montreal |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |