Correlation Between IGG and Global Energy
Can any of the company-specific risk be diversified away by investing in both IGG and Global Energy 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 IGG and Global Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IGG Inc and Global Energy Networks, you can compare the effects of market volatilities on IGG and Global Energy 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 IGG with a short position of Global Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGG and Global Energy.
Diversification Opportunities for IGG and Global Energy
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IGG and Global is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding IGG Inc and Global Energy Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Energy Networks and IGG 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 IGG Inc are associated (or correlated) with Global Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Energy Networks has no effect on the direction of IGG i.e., IGG and Global Energy go up and down completely randomly.
Pair Corralation between IGG and Global Energy
If you would invest 2.01 in Global Energy Networks on September 3, 2024 and sell it today you would earn a total of 0.00 from holding Global Energy Networks or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
IGG Inc vs. Global Energy Networks
Performance |
| Timeline |
| IGG Inc |
| Global Energy Networks |
IGG and Global Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IGG and Global Energy
The main advantage of trading using opposite IGG and Global Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGG position performs unexpectedly, Global Energy 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 Global Energy will offset losses from the drop in Global Energy's long position.The idea behind IGG Inc and Global Energy Networks pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Global Energy vs. Telefonica Brasil SA | Global Energy vs. Vodafone Group PLC | Global Energy vs. Grupo Televisa SAB | Global Energy vs. America Movil SAB |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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