Correlation Between Uniteds and IGM Financial
Can any of the company-specific risk be diversified away by investing in both Uniteds 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 Uniteds and IGM Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Uniteds Limited and IGM Financial, you can compare the effects of market volatilities on Uniteds 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 Uniteds with a short position of IGM Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uniteds and IGM Financial.
Diversification Opportunities for Uniteds and IGM Financial
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Uniteds and IGM is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Uniteds Limited and IGM Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGM Financial and Uniteds 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 Uniteds Limited 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 Uniteds i.e., Uniteds and IGM Financial go up and down completely randomly.
Pair Corralation between Uniteds and IGM Financial
Assuming the 90 days trading horizon Uniteds Limited is expected to generate 0.86 times more return on investment than IGM Financial. However, Uniteds Limited is 1.16 times less risky than IGM Financial. It trades about 0.07 of its potential returns per unit of risk. IGM Financial is currently generating about 0.0 per unit of risk. If you would invest 8,422 in Uniteds Limited on January 20, 2024 and sell it today you would earn a total of 3,180 from holding Uniteds Limited or generate 37.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.06% |
| Values | Daily Returns |
Uniteds Limited vs. IGM Financial
Performance |
| Timeline |
| Uniteds Limited |
| IGM Financial |
Uniteds and IGM Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Uniteds and IGM Financial
The main advantage of trading using opposite Uniteds and IGM Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uniteds 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.| Uniteds vs. Berkshire Hathaway CDR | Uniteds vs. E L Financial Corp | Uniteds vs. E L Financial 3 | Uniteds vs. Fairfax Financial Holdings |
| IGM Financial vs. Berkshire Hathaway CDR | IGM Financial vs. E L Financial Corp | IGM Financial vs. E L Financial 3 | IGM Financial vs. Fairfax Financial Holdings |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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