Correlation Between IGO and Rockridge Resources
Can any of the company-specific risk be diversified away by investing in both IGO and Rockridge 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 Rockridge 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 Rockridge Resources, you can compare the effects of market volatilities on IGO and Rockridge 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 Rockridge Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGO and Rockridge Resources.
Diversification Opportunities for IGO and Rockridge Resources
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IGO and Rockridge is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding IGO Limited and Rockridge Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rockridge 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 Rockridge Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rockridge Resources has no effect on the direction of IGO i.e., IGO and Rockridge Resources go up and down completely randomly.
Pair Corralation between IGO and Rockridge Resources
Assuming the 90 days horizon IGO Limited is expected to under-perform the Rockridge Resources. But the pink sheet apears to be less risky and, when comparing its historical volatility, IGO Limited is 3.53 times less risky than Rockridge Resources. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Rockridge Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2.86 in Rockridge Resources on September 3, 2024 and sell it today you would lose (1.76) from holding Rockridge Resources or give up 61.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IGO Limited vs. Rockridge Resources
Performance |
| Timeline |
| IGO Limited |
| Rockridge Resources |
IGO and Rockridge Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IGO and Rockridge Resources
The main advantage of trading using opposite IGO and Rockridge Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGO position performs unexpectedly, Rockridge 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 Rockridge Resources will offset losses from the drop in Rockridge Resources' long position.| IGO vs. Qubec Nickel Corp | IGO vs. Nickel Mines Limited | IGO vs. Mineral Resources Limited | IGO vs. Surge Copper Corp |
| Rockridge Resources vs. Qubec Nickel Corp | Rockridge Resources vs. IGO Limited | Rockridge Resources vs. Avarone Metals | Rockridge Resources vs. Adriatic Metals PLC |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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