Correlation Between IGO and Murchison Minerals
Can any of the company-specific risk be diversified away by investing in both IGO and Murchison Minerals 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 Murchison Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IGO Limited and Murchison Minerals, you can compare the effects of market volatilities on IGO and Murchison Minerals 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 Murchison Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGO and Murchison Minerals.
Diversification Opportunities for IGO and Murchison Minerals
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between IGO and Murchison is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding IGO Limited and Murchison Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Murchison Minerals 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 Murchison Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Murchison Minerals has no effect on the direction of IGO i.e., IGO and Murchison Minerals go up and down completely randomly.
Pair Corralation between IGO and Murchison Minerals
Assuming the 90 days horizon IGO Limited is expected to generate 0.37 times more return on investment than Murchison Minerals. However, IGO Limited is 2.7 times less risky than Murchison Minerals. It trades about -0.01 of its potential returns per unit of risk. Murchison Minerals is currently generating about -0.01 per unit of risk. If you would invest 958.00 in IGO Limited on September 4, 2024 and sell it today you would lose (206.00) from holding IGO Limited or give up 21.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
IGO Limited vs. Murchison Minerals
Performance |
| Timeline |
| IGO Limited |
| Murchison Minerals |
IGO and Murchison Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IGO and Murchison Minerals
The main advantage of trading using opposite IGO and Murchison Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGO position performs unexpectedly, Murchison Minerals 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 Murchison Minerals will offset losses from the drop in Murchison Minerals' long position.| IGO vs. Qubec Nickel Corp | IGO vs. Nickel Mines Limited | IGO vs. Mineral Resources Limited | IGO vs. Surge Copper Corp |
| Murchison Minerals vs. Niobay Metals | Murchison Minerals vs. Mundoro Capital | Murchison Minerals vs. E79 Resources Corp | Murchison Minerals vs. Norra Metals Corp |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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