Correlation Between IGM Financial and Infrastructure Dividend

Can any of the company-specific risk be diversified away by investing in both IGM Financial and Infrastructure Dividend 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 IGM Financial and Infrastructure Dividend into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between IGM Financial and Infrastructure Dividend Split, you can compare the effects of market volatilities on IGM Financial and Infrastructure Dividend 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 IGM Financial with a short position of Infrastructure Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGM Financial and Infrastructure Dividend.

Diversification Opportunities for IGM Financial and Infrastructure Dividend

0.08

Correlation Coefficient

IGM Financial  Infrastructure Dividend

Significant diversification

The 3 months correlation between IGM and Infrastructure is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding IGM Financial and Infrastructure Dividend Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infrastructure Dividend and IGM 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 IGM Financial are associated (or correlated) with Infrastructure Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infrastructure Dividend has no effect on the direction of IGM Financial i.e., IGM Financial and Infrastructure Dividend go up and down completely randomly.

Pair Corralation between IGM Financial and Infrastructure Dividend

Assuming the 90 days trading horizon IGM Financial is expected to under-perform the Infrastructure Dividend. In addition to that, IGM Financial is 1.84 times more volatile than Infrastructure Dividend Split. It trades about -0.06 of its total potential returns per unit of risk. Infrastructure Dividend Split is currently generating about -0.09 per unit of volatility. If you would invest  1,514  in Infrastructure Dividend Split on September 30, 2024 and sell it today you would lose (14.00) from holding Infrastructure Dividend Split or give up 0.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

IGM Financial  vs.  Infrastructure Dividend Split

IGM Financial

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in IGM Financial are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, IGM Financial displayed solid returns over the last few months and may actually be approaching a breakup point.

Infrastructure Dividend

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Infrastructure Dividend Split are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Infrastructure Dividend is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IGM Financial and Infrastructure Dividend

The main advantage of trading using opposite IGM Financial and Infrastructure Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGM Financial position performs unexpectedly, Infrastructure Dividend 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 Infrastructure Dividend will offset losses from the drop in Infrastructure Dividend's long position.

The idea behind IGM Financial and Infrastructure Dividend Split 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.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.