Correlation Between Champion Bear and IGO
Can any of the company-specific risk be diversified away by investing in both Champion Bear 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 Champion Bear and IGO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champion Bear Resources and IGO Limited, you can compare the effects of market volatilities on Champion Bear 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 Champion Bear with a short position of IGO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Bear and IGO.
Diversification Opportunities for Champion Bear and IGO
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Champion and IGO is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Champion Bear Resources and IGO Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGO Limited and Champion Bear 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 Champion Bear 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 Champion Bear i.e., Champion Bear and IGO go up and down completely randomly.
Pair Corralation between Champion Bear and IGO
Assuming the 90 days horizon Champion Bear Resources is expected to under-perform the IGO. In addition to that, Champion Bear is 15.81 times more volatile than IGO Limited. It trades about -0.22 of its total potential returns per unit of risk. IGO Limited is currently generating about -0.21 per unit of volatility. If you would invest 695.00 in IGO Limited on September 1, 2024 and sell it today you would lose (15.00) from holding IGO Limited or give up 2.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Champion Bear Resources vs. IGO Limited
Performance |
| Timeline |
| Champion Bear Resources |
| IGO Limited |
Champion Bear and IGO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champion Bear and IGO
The main advantage of trading using opposite Champion Bear and IGO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champion Bear 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.| Champion Bear vs. Aurelia Metals Limited | Champion Bear vs. Baroyeca Gold Silver | Champion Bear vs. Centaurus Metals Limited | Champion Bear vs. Edison Cobalt 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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