Correlation Between BCM Resources and IGO
Can any of the company-specific risk be diversified away by investing in both BCM Resources 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 BCM Resources and IGO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BCM Resources and IGO Limited, you can compare the effects of market volatilities on BCM Resources 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 BCM Resources with a short position of IGO. Check out your portfolio center. Please also check ongoing floating volatility patterns of BCM Resources and IGO.
Diversification Opportunities for BCM Resources and IGO
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BCM and IGO is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding BCM Resources and IGO Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGO Limited and BCM Resources 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 BCM Resources 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 BCM Resources i.e., BCM Resources and IGO go up and down completely randomly.
Pair Corralation between BCM Resources and IGO
Assuming the 90 days horizon BCM Resources is expected to generate 2.45 times more return on investment than IGO. However, BCM Resources is 2.45 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 -0.02 per unit of risk. If you would invest 5.00 in BCM Resources on September 3, 2024 and sell it today you would lose (1.47) from holding BCM Resources or give up 29.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BCM Resources vs. IGO Limited
Performance |
| Timeline |
| BCM Resources |
| IGO Limited |
BCM Resources and IGO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BCM Resources and IGO
The main advantage of trading using opposite BCM Resources and IGO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BCM Resources 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.| BCM Resources vs. Edison Cobalt Corp | BCM Resources vs. Champion Bear Resources | BCM Resources vs. Avarone Metals | BCM Resources vs. Adriatic Metals PLC |
| 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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