Correlation Between IGO and Focus Graphite
Can any of the company-specific risk be diversified away by investing in both IGO and Focus Graphite 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 Focus Graphite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IGO Limited and Focus Graphite, you can compare the effects of market volatilities on IGO and Focus Graphite 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 Focus Graphite. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGO and Focus Graphite.
Diversification Opportunities for IGO and Focus Graphite
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between IGO and Focus is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding IGO Limited and Focus Graphite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Graphite 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 Focus Graphite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Graphite has no effect on the direction of IGO i.e., IGO and Focus Graphite go up and down completely randomly.
Pair Corralation between IGO and Focus Graphite
Assuming the 90 days horizon IGO Limited is expected to under-perform the Focus Graphite. But the pink sheet apears to be less risky and, when comparing its historical volatility, IGO Limited is 2.3 times less risky than Focus Graphite. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Focus Graphite is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 40.00 in Focus Graphite on November 1, 2024 and sell it today you would lose (33.62) from holding Focus Graphite or give up 84.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.37% |
| Values | Daily Returns |
IGO Limited vs. Focus Graphite
Performance |
| Timeline |
| IGO Limited |
| Focus Graphite |
IGO and Focus Graphite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IGO and Focus Graphite
The main advantage of trading using opposite IGO and Focus Graphite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGO position performs unexpectedly, Focus Graphite 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 Focus Graphite will offset losses from the drop in Focus Graphite's long position.| IGO vs. Qubec Nickel Corp | IGO vs. Nickel Mines Limited | IGO vs. Mineral Resources Limited | IGO vs. Surge Copper Corp |
| Focus Graphite vs. Northern Graphite | Focus Graphite vs. Syrah Resources Limited | Focus Graphite vs. Altura Mining Limited | Focus Graphite vs. Vulcan Minerals |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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