Correlation Between IGO and Electric Royalties
Can any of the company-specific risk be diversified away by investing in both IGO and Electric Royalties 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 Electric Royalties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IGO Limited and Electric Royalties, you can compare the effects of market volatilities on IGO and Electric Royalties 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 Electric Royalties. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGO and Electric Royalties.
Diversification Opportunities for IGO and Electric Royalties
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IGO and Electric is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding IGO Limited and Electric Royalties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electric Royalties 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 Electric Royalties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electric Royalties has no effect on the direction of IGO i.e., IGO and Electric Royalties go up and down completely randomly.
Pair Corralation between IGO and Electric Royalties
Assuming the 90 days horizon IGO Limited is expected to under-perform the Electric Royalties. But the pink sheet apears to be less risky and, when comparing its historical volatility, IGO Limited is 1.78 times less risky than Electric Royalties. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Electric Royalties is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 21.00 in Electric Royalties on September 4, 2024 and sell it today you would lose (5.00) from holding Electric Royalties or give up 23.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
IGO Limited vs. Electric Royalties
Performance |
| Timeline |
| IGO Limited |
| Electric Royalties |
IGO and Electric Royalties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IGO and Electric Royalties
The main advantage of trading using opposite IGO and Electric Royalties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGO position performs unexpectedly, Electric Royalties 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 Electric Royalties will offset losses from the drop in Electric Royalties' long position.| IGO vs. Qubec Nickel Corp | IGO vs. Nickel Mines Limited | IGO vs. Mineral Resources Limited | IGO vs. Surge Copper Corp |
| Electric Royalties vs. Prime Meridian Resources | Electric Royalties vs. Macmahon Holdings Limited | Electric Royalties vs. Rokmaster Resources Corp | Electric Royalties vs. Hudson Resources |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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