Correlation Between Australian Strategic and IGO
Can any of the company-specific risk be diversified away by investing in both Australian Strategic and IGO 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 Australian Strategic and IGO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Strategic Materials and IGO Limited, you can compare the effects of market volatilities on Australian Strategic and IGO 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 Australian Strategic with a short position of IGO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Strategic and IGO.
Diversification Opportunities for Australian Strategic and IGO
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Australian and IGO is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Australian Strategic Materials and IGO Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGO Limited and Australian Strategic 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 Australian Strategic Materials are associated (or correlated) with IGO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IGO Limited has no effect on the direction of Australian Strategic i.e., Australian Strategic and IGO go up and down completely randomly.
Pair Corralation between Australian Strategic and IGO
Assuming the 90 days horizon Australian Strategic Materials is expected to generate 1.63 times more return on investment than IGO. However, Australian Strategic is 1.63 times more volatile than IGO Limited. It trades about -0.02 of its potential returns per unit of risk. IGO Limited is currently generating about -0.04 per unit of risk. If you would invest 93.00 in Australian Strategic Materials on September 20, 2024 and sell it today you would lose (62.00) from holding Australian Strategic Materials or give up 66.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Strategic Materials vs. IGO Limited
Performance |
| Timeline |
| Australian Strategic |
| IGO Limited |
Australian Strategic and IGO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Strategic and IGO
The main advantage of trading using opposite Australian Strategic and IGO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Strategic position performs unexpectedly, IGO 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 IGO will offset losses from the drop in IGO's long position.| Australian Strategic vs. IGO Limited | Australian Strategic vs. Focus Graphite | Australian Strategic vs. Anson Resources Limited | Australian Strategic vs. Avarone Metals |
| IGO vs. Qubec Nickel Corp | IGO vs. Nickel Mines Limited | IGO vs. Mineral Resources Limited | IGO vs. Surge Copper Corp |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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