Correlation Between IGO and Nuinsco Resources
Can any of the company-specific risk be diversified away by investing in both IGO and Nuinsco Resources 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 Nuinsco Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IGO Limited and Nuinsco Resources Limited, you can compare the effects of market volatilities on IGO and Nuinsco Resources 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 Nuinsco Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGO and Nuinsco Resources.
Diversification Opportunities for IGO and Nuinsco Resources
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between IGO and Nuinsco is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding IGO Limited and Nuinsco Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuinsco Resources 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 Nuinsco Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuinsco Resources has no effect on the direction of IGO i.e., IGO and Nuinsco Resources go up and down completely randomly.
Pair Corralation between IGO and Nuinsco Resources
Assuming the 90 days horizon IGO Limited is expected to generate 0.02 times more return on investment than Nuinsco Resources. However, IGO Limited is 49.8 times less risky than Nuinsco Resources. It trades about -0.22 of its potential returns per unit of risk. Nuinsco Resources Limited is currently generating about -0.07 per unit of risk. If you would invest 695.00 in IGO Limited on August 28, 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. Nuinsco Resources Limited
Performance |
| Timeline |
| IGO Limited |
| Nuinsco Resources |
IGO and Nuinsco Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IGO and Nuinsco Resources
The main advantage of trading using opposite IGO and Nuinsco Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGO position performs unexpectedly, Nuinsco Resources 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 Nuinsco Resources will offset losses from the drop in Nuinsco Resources' long position.The idea behind IGO Limited and Nuinsco Resources Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Nuinsco Resources vs. Newport Gold | Nuinsco Resources vs. Monarca Minerals | Nuinsco Resources vs. First American Silver | Nuinsco Resources vs. Tamino 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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