Correlation Between IGO and Patriot Battery
Can any of the company-specific risk be diversified away by investing in both IGO and Patriot Battery 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 Patriot Battery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IGO Limited and Patriot Battery Metals, you can compare the effects of market volatilities on IGO and Patriot Battery 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 Patriot Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGO and Patriot Battery.
Diversification Opportunities for IGO and Patriot Battery
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between IGO and Patriot is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding IGO Limited and Patriot Battery Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patriot Battery Metals 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 Patriot Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patriot Battery Metals has no effect on the direction of IGO i.e., IGO and Patriot Battery go up and down completely randomly.
Pair Corralation between IGO and Patriot Battery
Assuming the 90 days horizon IGO Limited is expected to under-perform the Patriot Battery. In addition to that, IGO is 1.28 times more volatile than Patriot Battery Metals. It trades about -0.13 of its total potential returns per unit of risk. Patriot Battery Metals is currently generating about -0.14 per unit of volatility. If you would invest 212.00 in Patriot Battery Metals on December 6, 2024 and sell it today you would lose (20.00) from holding Patriot Battery Metals or give up 9.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
IGO Limited vs. Patriot Battery Metals
Performance |
| Timeline |
| IGO Limited |
| Patriot Battery Metals |
IGO and Patriot Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IGO and Patriot Battery
The main advantage of trading using opposite IGO and Patriot Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGO position performs unexpectedly, Patriot Battery 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 Patriot Battery will offset losses from the drop in Patriot Battery's long position.| IGO vs. Qubec Nickel Corp | ||
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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