Correlation Between IGO and Eramet SA
Can any of the company-specific risk be diversified away by investing in both IGO and Eramet SA 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 Eramet SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IGO Limited and Eramet SA ADR, you can compare the effects of market volatilities on IGO and Eramet SA 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 Eramet SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGO and Eramet SA.
Diversification Opportunities for IGO and Eramet SA
Pay attention - limited upside
The 3 months correlation between IGO and Eramet is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding IGO Limited and Eramet SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eramet SA ADR 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 Eramet SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eramet SA ADR has no effect on the direction of IGO i.e., IGO and Eramet SA go up and down completely randomly.
Pair Corralation between IGO and Eramet SA
Assuming the 90 days horizon IGO Limited is expected to generate 1.19 times more return on investment than Eramet SA. However, IGO is 1.19 times more volatile than Eramet SA ADR. It trades about -0.01 of its potential returns per unit of risk. Eramet SA ADR is currently generating about -0.07 per unit of risk. If you would invest 848.00 in IGO Limited on September 3, 2024 and sell it today you would lose (168.00) from holding IGO Limited or give up 19.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
IGO Limited vs. Eramet SA ADR
Performance |
| Timeline |
| IGO Limited |
| Eramet SA ADR |
IGO and Eramet SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IGO and Eramet SA
The main advantage of trading using opposite IGO and Eramet SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGO position performs unexpectedly, Eramet SA 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 Eramet SA will offset losses from the drop in Eramet SA's long position.| IGO vs. Qubec Nickel Corp | IGO vs. Nickel Mines Limited | IGO vs. Mineral Resources Limited | IGO vs. Surge Copper Corp |
| Eramet SA vs. Qubec Nickel Corp | Eramet SA vs. IGO Limited | Eramet SA vs. Avarone Metals | Eramet SA 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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