Correlation Between Toromont Industries and IGM Financial

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Can any of the company-specific risk be diversified away by investing in both Toromont Industries 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 Toromont Industries and IGM Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Toromont Industries and IGM Financial, you can compare the effects of market volatilities on Toromont Industries 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 Toromont Industries with a short position of IGM Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toromont Industries and IGM Financial.

Diversification Opportunities for Toromont Industries and IGM Financial

0.13
  Correlation Coefficient

Average diversification

The 3 months correlation between Toromont and IGM is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Toromont Industries and IGM Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGM Financial and Toromont Industries 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 Toromont Industries 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 Toromont Industries i.e., Toromont Industries and IGM Financial go up and down completely randomly.

Pair Corralation between Toromont Industries and IGM Financial

Assuming the 90 days trading horizon Toromont Industries is expected to generate 1.5 times more return on investment than IGM Financial. However, Toromont Industries is 1.5 times more volatile than IGM Financial. It trades about 0.16 of its potential returns per unit of risk. IGM Financial is currently generating about 0.09 per unit of risk. If you would invest  11,407  in Toromont Industries on April 23, 2025 and sell it today you would earn a total of  1,338  from holding Toromont Industries or generate 11.73% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Toromont Industries  vs.  IGM Financial

 Performance 
       Timeline  
Toromont Industries 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Toromont Industries are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical indicators, Toromont Industries may actually be approaching a critical reversion point that can send shares even higher in August 2025.
IGM Financial 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in IGM Financial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. 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.

Toromont Industries and IGM Financial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Toromont Industries and IGM Financial

The main advantage of trading using opposite Toromont Industries and IGM Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toromont Industries 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 Toromont Industries 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.

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