Correlation Between IGI Life and Loads

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

By analyzing existing cross correlation between IGI Life Insurance and Loads, you can compare the effects of market volatilities on IGI Life and Loads 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 IGI Life with a short position of Loads. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGI Life and Loads.

Diversification Opportunities for IGI Life and Loads

0.89

Correlation Coefficient

IGI Life  Loads

Very poor diversification

The 3 months correlation between IGI and Loads is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding IGI Life Insurance and Loads in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loads and IGI Life 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 IGI Life Insurance are associated (or correlated) with Loads. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loads has no effect on the direction of IGI Life i.e., IGI Life and Loads go up and down completely randomly.

Pair Corralation between IGI Life and Loads

Assuming the 90 days trading horizon IGI Life Insurance is expected to under-perform the Loads. But the stock apears to be less risky and, when comparing its historical volatility, IGI Life Insurance is 1.16 times less risky than Loads. The stock trades about -0.05 of its potential returns per unit of risk. The Loads is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,534  in Loads on October 10, 2024 and sell it today you would lose (37.00) from holding Loads or give up 2.41% of portfolio value over 90 days.

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

IGI Life Insurance  vs.  Loads

IGI Life Insurance

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in IGI Life Insurance are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, IGI Life sustained solid returns over the last few months and may actually be approaching a breakup point.

Loads

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Loads are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Loads disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IGI Life and Loads

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

The idea behind IGI Life Insurance and Loads 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.