Correlation Between IGO and Peruvian Metals
Can any of the company-specific risk be diversified away by investing in both IGO and Peruvian Metals 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 Peruvian Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IGO Limited and Peruvian Metals Corp, you can compare the effects of market volatilities on IGO and Peruvian Metals 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 Peruvian Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGO and Peruvian Metals.
Diversification Opportunities for IGO and Peruvian Metals
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IGO and Peruvian is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding IGO Limited and Peruvian Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peruvian Metals Corp 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 Peruvian Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peruvian Metals Corp has no effect on the direction of IGO i.e., IGO and Peruvian Metals go up and down completely randomly.
Pair Corralation between IGO and Peruvian Metals
Assuming the 90 days horizon IGO Limited is expected to under-perform the Peruvian Metals. But the pink sheet apears to be less risky and, when comparing its historical volatility, IGO Limited is 2.22 times less risky than Peruvian Metals. The pink sheet trades about -0.06 of its potential returns per unit of risk. The Peruvian Metals Corp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 3.80 in Peruvian Metals Corp on September 12, 2024 and sell it today you would lose (2.71) from holding Peruvian Metals Corp or give up 71.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IGO Limited vs. Peruvian Metals Corp
Performance |
| Timeline |
| IGO Limited |
| Peruvian Metals Corp |
IGO and Peruvian Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IGO and Peruvian Metals
The main advantage of trading using opposite IGO and Peruvian Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGO position performs unexpectedly, Peruvian Metals 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 Peruvian Metals will offset losses from the drop in Peruvian Metals' long position.| IGO vs. Qubec Nickel Corp | IGO vs. Nickel Mines Limited | IGO vs. Mineral Resources Limited | IGO vs. Surge Copper Corp |
| Peruvian Metals vs. Qubec Nickel Corp | Peruvian Metals vs. IGO Limited | Peruvian Metals vs. Focus Graphite | Peruvian Metals 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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