Correlation Between HPQ Silicon and IGM Financial

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

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

Diversification Opportunities for HPQ Silicon and IGM Financial

0.49

Correlation Coefficient

HPQ Silicon  IGM Financial

Very weak diversification

The 3 months correlation between HPQ and IGM is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding HPQ Silicon Resources and IGM Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGM Financial and HPQ Silicon 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 HPQ Silicon Resources 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 HPQ Silicon i.e., HPQ Silicon and IGM Financial go up and down completely randomly.

Pair Corralation between HPQ Silicon and IGM Financial

Assuming the 90 days horizon HPQ Silicon Resources is expected to under-perform the IGM Financial. In addition to that, HPQ Silicon is 3.57 times more volatile than IGM Financial. It trades about -0.02 of its total potential returns per unit of risk. IGM Financial is currently generating about -0.04 per unit of volatility. If you would invest  4,606  in IGM Financial on December 17, 2024 and sell it today you would lose (163.00) from holding IGM Financial or give up 3.54% of portfolio value over 90 days.

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

HPQ Silicon Resources  vs.  IGM Financial

HPQ Silicon Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days HPQ Silicon Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

IGM Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days IGM Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, IGM Financial is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with HPQ Silicon and IGM Financial

The main advantage of trading using opposite HPQ Silicon and IGM Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HPQ Silicon 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 HPQ Silicon Resources 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.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.