Correlation Between IGO and Chalice Mining
Can any of the company-specific risk be diversified away by investing in both IGO and Chalice Mining 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 Chalice Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IGO Limited and Chalice Mining Limited, you can compare the effects of market volatilities on IGO and Chalice Mining 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 Chalice Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGO and Chalice Mining.
Diversification Opportunities for IGO and Chalice Mining
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between IGO and Chalice is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding IGO Limited and Chalice Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chalice Mining 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 Chalice Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chalice Mining has no effect on the direction of IGO i.e., IGO and Chalice Mining go up and down completely randomly.
Pair Corralation between IGO and Chalice Mining
Assuming the 90 days horizon IGO Limited is expected to under-perform the Chalice Mining. But the pink sheet apears to be less risky and, when comparing its historical volatility, IGO Limited is 1.97 times less risky than Chalice Mining. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Chalice Mining Limited is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 121.00 in Chalice Mining Limited on September 14, 2024 and sell it today you would lose (43.00) from holding Chalice Mining Limited or give up 35.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
IGO Limited vs. Chalice Mining Limited
Performance |
| Timeline |
| IGO Limited |
| Chalice Mining |
IGO and Chalice Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IGO and Chalice Mining
The main advantage of trading using opposite IGO and Chalice Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGO position performs unexpectedly, Chalice Mining 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 Chalice Mining will offset losses from the drop in Chalice Mining's long position.The idea behind IGO Limited and Chalice Mining Limited 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.| Chalice Mining vs. Qubec Nickel Corp | Chalice Mining vs. IGO Limited | Chalice Mining vs. Focus Graphite | Chalice Mining vs. Mineral Res |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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