Correlation Between Core Lithium and IGO
Can any of the company-specific risk be diversified away by investing in both Core Lithium 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 Core Lithium and IGO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Core Lithium and IGO Limited, you can compare the effects of market volatilities on Core Lithium 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 Core Lithium with a short position of IGO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Core Lithium and IGO.
Diversification Opportunities for Core Lithium and IGO
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Core and IGO is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Core Lithium and IGO Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGO Limited and Core Lithium 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 Core Lithium 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 Core Lithium i.e., Core Lithium and IGO go up and down completely randomly.
Pair Corralation between Core Lithium and IGO
Assuming the 90 days horizon Core Lithium is expected to generate 3.11 times more return on investment than IGO. However, Core Lithium is 3.11 times more volatile than IGO Limited. It trades about 0.03 of its potential returns per unit of risk. IGO Limited is currently generating about -0.07 per unit of risk. If you would invest 8.50 in Core Lithium on September 1, 2024 and sell it today you would lose (2.30) from holding Core Lithium or give up 27.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Core Lithium vs. IGO Limited
Performance |
| Timeline |
| Core Lithium |
| IGO Limited |
Core Lithium and IGO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Core Lithium and IGO
The main advantage of trading using opposite Core Lithium and IGO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Core Lithium 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.| Core Lithium vs. ATT Inc | Core Lithium vs. Merck Company | Core Lithium vs. Walt Disney | Core Lithium vs. Caterpillar |
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 CEOs Directory module to screen CEOs from public companies around the world.
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