Correlation Between Oceanic Iron and IGO
Can any of the company-specific risk be diversified away by investing in both Oceanic Iron 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 Oceanic Iron and IGO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oceanic Iron Ore and IGO Limited, you can compare the effects of market volatilities on Oceanic Iron 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 Oceanic Iron with a short position of IGO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oceanic Iron and IGO.
Diversification Opportunities for Oceanic Iron and IGO
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Oceanic and IGO is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Oceanic Iron Ore and IGO Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGO Limited and Oceanic Iron 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 Oceanic Iron Ore 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 Oceanic Iron i.e., Oceanic Iron and IGO go up and down completely randomly.
Pair Corralation between Oceanic Iron and IGO
Assuming the 90 days horizon Oceanic Iron Ore is expected to generate 1.23 times more return on investment than IGO. However, Oceanic Iron is 1.23 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 -0.04 per unit of risk. If you would invest 6.00 in Oceanic Iron Ore on September 20, 2024 and sell it today you would earn a total of 1.00 from holding Oceanic Iron Ore or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 81.93% |
| Values | Daily Returns |
Oceanic Iron Ore vs. IGO Limited
Performance |
| Timeline |
| Oceanic Iron Ore |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| IGO Limited |
Oceanic Iron and IGO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oceanic Iron and IGO
The main advantage of trading using opposite Oceanic Iron and IGO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oceanic Iron 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.| Oceanic Iron vs. Avarone Metals | Oceanic Iron vs. Aurelia Metals Limited | Oceanic Iron vs. Adriatic Metals PLC | Oceanic Iron vs. Huntsman Exploration |
| 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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