Correlation Between Globex Mining and IGO
Can any of the company-specific risk be diversified away by investing in both Globex Mining 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 Globex Mining and IGO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globex Mining Enterprises and IGO Limited, you can compare the effects of market volatilities on Globex Mining 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 Globex Mining with a short position of IGO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globex Mining and IGO.
Diversification Opportunities for Globex Mining and IGO
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Globex and IGO is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Globex Mining Enterprises and IGO Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGO Limited and Globex Mining 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 Globex Mining Enterprises 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 Globex Mining i.e., Globex Mining and IGO go up and down completely randomly.
Pair Corralation between Globex Mining and IGO
Assuming the 90 days horizon Globex Mining Enterprises is expected to generate 4.12 times more return on investment than IGO. However, Globex Mining is 4.12 times more volatile than IGO Limited. It trades about 0.01 of its potential returns per unit of risk. IGO Limited is currently generating about -0.21 per unit of risk. If you would invest 76.00 in Globex Mining Enterprises on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Globex Mining Enterprises or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Globex Mining Enterprises vs. IGO Limited
Performance |
| Timeline |
| Globex Mining Enterprises |
| IGO Limited |
Globex Mining and IGO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globex Mining and IGO
The main advantage of trading using opposite Globex Mining and IGO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globex Mining 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.| Globex Mining vs. South32 Limited | Globex Mining vs. NioCorp Developments Ltd | Globex Mining vs. HUMANA INC | Globex Mining vs. SCOR PK |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Stocks Directory Find actively traded stocks across global markets | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |