Correlation Between IGO and Diamond Holdings
Can any of the company-specific risk be diversified away by investing in both IGO and Diamond Holdings 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 Diamond Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IGO Limited and Diamond Holdings, you can compare the effects of market volatilities on IGO and Diamond Holdings 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 Diamond Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGO and Diamond Holdings.
Diversification Opportunities for IGO and Diamond Holdings
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IGO and Diamond is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding IGO Limited and Diamond Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Holdings 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 Diamond Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Holdings has no effect on the direction of IGO i.e., IGO and Diamond Holdings go up and down completely randomly.
Pair Corralation between IGO and Diamond Holdings
Assuming the 90 days horizon IGO Limited is expected to generate 0.66 times more return on investment than Diamond Holdings. However, IGO Limited is 1.51 times less risky than Diamond Holdings. It trades about -0.01 of its potential returns per unit of risk. Diamond Holdings is currently generating about -0.06 per unit of risk. If you would invest 958.00 in IGO Limited on September 4, 2024 and sell it today you would lose (206.00) from holding IGO Limited or give up 21.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
IGO Limited vs. Diamond Holdings
Performance |
| Timeline |
| IGO Limited |
| Diamond Holdings |
IGO and Diamond Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IGO and Diamond Holdings
The main advantage of trading using opposite IGO and Diamond Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGO position performs unexpectedly, Diamond Holdings 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 Diamond Holdings will offset losses from the drop in Diamond Holdings' long position.| IGO vs. Qubec Nickel Corp | IGO vs. Nickel Mines Limited | IGO vs. Mineral Resources Limited | IGO vs. Surge Copper Corp |
| Diamond Holdings vs. Qubec Nickel Corp | Diamond Holdings vs. IGO Limited | Diamond Holdings vs. Avarone Metals | Diamond Holdings 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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