Correlation Between Dividend Growth and IGM Financial
Can any of the company-specific risk be diversified away by investing in both Dividend Growth 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 Dividend Growth and IGM Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dividend Growth Split and IGM Financial, you can compare the effects of market volatilities on Dividend Growth 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 Dividend Growth with a short position of IGM Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dividend Growth and IGM Financial.
Diversification Opportunities for Dividend Growth and IGM Financial
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dividend and IGM is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Dividend Growth Split and IGM Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGM Financial and Dividend Growth 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 Dividend Growth Split 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 Dividend Growth i.e., Dividend Growth and IGM Financial go up and down completely randomly.
Pair Corralation between Dividend Growth and IGM Financial
Assuming the 90 days trading horizon Dividend Growth Split is expected to generate 1.41 times more return on investment than IGM Financial. However, Dividend Growth is 1.41 times more volatile than IGM Financial. It trades about 0.06 of its potential returns per unit of risk. IGM Financial is currently generating about -0.01 per unit of risk. If you would invest 603.00 in Dividend Growth Split on January 25, 2024 and sell it today you would earn a total of 10.00 from holding Dividend Growth Split or generate 1.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dividend Growth Split vs. IGM Financial
Performance |
| Timeline |
| Dividend Growth Split |
| IGM Financial |
Dividend Growth and IGM Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dividend Growth and IGM Financial
The main advantage of trading using opposite Dividend Growth and IGM Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dividend Growth 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.| Dividend Growth vs. Canadian Imperial Bank | Dividend Growth vs. Fairfax Financial Holdings | Dividend Growth vs. Bank of Montreal | Dividend Growth vs. Bank of Montreal |
| 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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