Correlation Between Quipt Home and IGM Financial

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

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

Diversification Opportunities for Quipt Home and IGM Financial

0.01

Correlation Coefficient

Quipt Home  IGM Financial

Significant diversification

The 3 months correlation between Quipt and IGM is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Quipt Home Medical and IGM Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGM Financial and Quipt Home 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 Quipt Home Medical 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 Quipt Home i.e., Quipt Home and IGM Financial go up and down completely randomly.

Pair Corralation between Quipt Home and IGM Financial

Assuming the 90 days trading horizon Quipt Home Medical is expected to under-perform the IGM Financial. In addition to that, Quipt Home is 2.6 times more volatile than IGM Financial. It trades about -0.03 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  3,713  in IGM Financial on October 27, 2024 and sell it today you would earn a total of  889.00  from holding IGM Financial or generate 23.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Quipt Home Medical  vs.  IGM Financial

Quipt Home Medical

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Quipt Home Medical are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Quipt Home displayed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Quipt Home and IGM Financial

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

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.