Correlation Between IGO and M3 Metals
Can any of the company-specific risk be diversified away by investing in both IGO and M3 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 M3 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 M3 Metals Corp, you can compare the effects of market volatilities on IGO and M3 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 M3 Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGO and M3 Metals.
Diversification Opportunities for IGO and M3 Metals
Good diversification
The 3 months correlation between IGO and MLGCF is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding IGO Limited and M3 Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M3 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 M3 Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M3 Metals Corp has no effect on the direction of IGO i.e., IGO and M3 Metals go up and down completely randomly.
Pair Corralation between IGO and M3 Metals
Assuming the 90 days horizon IGO Limited is expected to generate 0.17 times more return on investment than M3 Metals. However, IGO Limited is 5.79 times less risky than M3 Metals. It trades about -0.21 of its potential returns per unit of risk. M3 Metals Corp is currently generating about -0.21 per unit of risk. If you would invest 695.00 in IGO Limited on September 5, 2024 and sell it today you would lose (15.00) from holding IGO Limited or give up 2.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IGO Limited vs. M3 Metals Corp
Performance |
| Timeline |
| IGO Limited |
| M3 Metals Corp |
IGO and M3 Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IGO and M3 Metals
The main advantage of trading using opposite IGO and M3 Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGO position performs unexpectedly, M3 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 M3 Metals will offset losses from the drop in M3 Metals' long position.| IGO vs. Qubec Nickel Corp | IGO vs. Nickel Mines Limited | IGO vs. Mineral Resources Limited | IGO vs. Surge Copper Corp |
| M3 Metals vs. Qubec Nickel Corp | M3 Metals vs. IGO Limited | M3 Metals vs. Avarone Metals | M3 Metals vs. Elcora Advanced Materials |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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