Correlation Between IGM Financial and AGEDB Technology

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

By analyzing existing cross correlation between IGM Financial and AGEDB Technology, you can compare the effects of market volatilities on IGM Financial and AGEDB Technology 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 AGEDB Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGM Financial and AGEDB Technology.

Diversification Opportunities for IGM Financial and AGEDB Technology

-0.9

Correlation Coefficient

IGM Financial  AGEDB Technology

Pay attention - limited upside

The 3 months correlation between IGM and AGEDB is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding IGM Financial and AGEDB Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGEDB Technology 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 AGEDB Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGEDB Technology has no effect on the direction of IGM Financial i.e., IGM Financial and AGEDB Technology go up and down completely randomly.

Pair Corralation between IGM Financial and AGEDB Technology

Assuming the 90 days trading horizon IGM Financial is expected to under-perform the AGEDB Technology. But the stock apears to be less risky and, when comparing its historical volatility, IGM Financial is 10.6 times less risky than AGEDB Technology. The stock trades about -0.16 of its potential returns per unit of risk. The AGEDB Technology is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  10.00  in AGEDB Technology on October 8, 2024 and sell it today you would earn a total of  8.00  from holding AGEDB Technology or generate 80.0% return on investment over 90 days.

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

IGM Financial  vs.  AGEDB Technology

IGM Financial

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in IGM Financial are ranked lower than 17 (%) 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.

AGEDB Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AGEDB Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with IGM Financial and AGEDB Technology

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

The idea behind IGM Financial and AGEDB Technology 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.

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