Correlation Between IGM Financial and CoinSmart Financial

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

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

Diversification Opportunities for IGM Financial and CoinSmart Financial

0.0

Correlation Coefficient

IGM Financial  CoinSmart Financial

Pay attention - limited upside

The 3 months correlation between IGM and CoinSmart is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding IGM Financial and CoinSmart Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoinSmart Financial 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 CoinSmart Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CoinSmart Financial has no effect on the direction of IGM Financial i.e., IGM Financial and CoinSmart Financial go up and down completely randomly.

Pair Corralation between IGM Financial and CoinSmart Financial

Assuming the 90 days trading horizon IGM Financial is expected to generate 3.58 times less return on investment than CoinSmart Financial. But when comparing it to its historical volatility, IGM Financial is 3.01 times less risky than CoinSmart Financial. It trades about 0.04 of its potential returns per unit of risk. CoinSmart Financial is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  12.00  in CoinSmart Financial on October 26, 2024 and sell it today you would earn a total of  10.00  from holding CoinSmart Financial or generate 83.33% return on investment over 90 days.

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

IGM Financial  vs.  CoinSmart Financial

IGM Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IGM Financial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, IGM Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

CoinSmart Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CoinSmart Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, CoinSmart Financial is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with IGM Financial and CoinSmart Financial

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

The idea behind IGM Financial and CoinSmart 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.