Correlation Between IGO and American Rare
Can any of the company-specific risk be diversified away by investing in both IGO and American Rare 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 IGO and American Rare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IGO Limited and American Rare Earths, you can compare the effects of market volatilities on IGO and American Rare 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 IGO with a short position of American Rare. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGO and American Rare.
Diversification Opportunities for IGO and American Rare
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IGO and American is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding IGO Limited and American Rare Earths in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Rare Earths and IGO 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 IGO Limited are associated (or correlated) with American Rare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Rare Earths has no effect on the direction of IGO i.e., IGO and American Rare go up and down completely randomly.
Pair Corralation between IGO and American Rare
Assuming the 90 days horizon IGO Limited is expected to generate 0.12 times more return on investment than American Rare. However, IGO Limited is 8.39 times less risky than American Rare. It trades about -0.22 of its potential returns per unit of risk. American Rare Earths is currently generating about -0.04 per unit of risk. If you would invest 695.00 in IGO Limited on September 3, 2024 and sell it today you would lose (15.00) from holding IGO Limited or give up 2.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IGO Limited vs. American Rare Earths
Performance |
| Timeline |
| IGO Limited |
| American Rare Earths |
IGO and American Rare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IGO and American Rare
The main advantage of trading using opposite IGO and American Rare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGO position performs unexpectedly, American Rare 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 American Rare will offset losses from the drop in American Rare's long position.| IGO vs. Qubec Nickel Corp | IGO vs. Nickel Mines Limited | IGO vs. Mineral Resources Limited | IGO vs. Surge Copper Corp |
| American Rare vs. Qubec Nickel Corp | American Rare vs. IGO Limited | American Rare vs. Avarone Metals | American Rare vs. Adriatic Metals PLC |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |