Correlation Between Erin Ventures and IGO
Can any of the company-specific risk be diversified away by investing in both Erin Ventures 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 Erin Ventures and IGO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Erin Ventures and IGO Limited, you can compare the effects of market volatilities on Erin Ventures 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 Erin Ventures with a short position of IGO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erin Ventures and IGO.
Diversification Opportunities for Erin Ventures and IGO
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Erin and IGO is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Erin Ventures and IGO Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGO Limited and Erin Ventures 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 Erin Ventures 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 Erin Ventures i.e., Erin Ventures and IGO go up and down completely randomly.
Pair Corralation between Erin Ventures and IGO
Assuming the 90 days horizon Erin Ventures is expected to generate 2.67 times more return on investment than IGO. However, Erin Ventures is 2.67 times more volatile than IGO Limited. It trades about 0.04 of its potential returns per unit of risk. IGO Limited is currently generating about -0.06 per unit of risk. If you would invest 4.10 in Erin Ventures on September 12, 2024 and sell it today you would lose (0.40) from holding Erin Ventures or give up 9.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Erin Ventures vs. IGO Limited
Performance |
| Timeline |
| Erin Ventures |
| IGO Limited |
Erin Ventures and IGO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erin Ventures and IGO
The main advantage of trading using opposite Erin Ventures and IGO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erin Ventures 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.| Erin Ventures vs. Qubec Nickel Corp | Erin Ventures vs. IGO Limited | Erin Ventures vs. Focus Graphite | Erin Ventures vs. Mineral Res |
| 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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