Correlation Between IGO and Piedmont Lithium
Can any of the company-specific risk be diversified away by investing in both IGO and Piedmont Lithium 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 Piedmont Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IGO Limited and Piedmont Lithium, you can compare the effects of market volatilities on IGO and Piedmont Lithium 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 Piedmont Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGO and Piedmont Lithium.
Diversification Opportunities for IGO and Piedmont Lithium
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IGO and Piedmont is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding IGO Limited and Piedmont Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Piedmont Lithium 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 Piedmont Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Piedmont Lithium has no effect on the direction of IGO i.e., IGO and Piedmont Lithium go up and down completely randomly.
Pair Corralation between IGO and Piedmont Lithium
Assuming the 90 days horizon IGO Limited is expected to under-perform the Piedmont Lithium. But the pink sheet apears to be less risky and, when comparing its historical volatility, IGO Limited is 2.6 times less risky than Piedmont Lithium. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Piedmont Lithium is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 47.00 in Piedmont Lithium on September 12, 2024 and sell it today you would lose (35.00) from holding Piedmont Lithium or give up 74.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IGO Limited vs. Piedmont Lithium
Performance |
| Timeline |
| IGO Limited |
| Piedmont Lithium |
IGO and Piedmont Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IGO and Piedmont Lithium
The main advantage of trading using opposite IGO and Piedmont Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGO position performs unexpectedly, Piedmont Lithium 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 Piedmont Lithium will offset losses from the drop in Piedmont Lithium's long position.| IGO vs. Qubec Nickel Corp | IGO vs. Nickel Mines Limited | IGO vs. Mineral Resources Limited | IGO vs. Surge Copper Corp |
| Piedmont Lithium vs. Sassy Resources | Piedmont Lithium vs. Aldebaran Resources | Piedmont Lithium vs. Search Minerals | Piedmont Lithium 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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