Correlation Between Iluka Resources and IGO
Can any of the company-specific risk be diversified away by investing in both Iluka Resources and IGO 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 Iluka Resources and IGO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iluka Resources Limited and IGO Limited, you can compare the effects of market volatilities on Iluka Resources and IGO 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 Iluka Resources with a short position of IGO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iluka Resources and IGO.
Diversification Opportunities for Iluka Resources and IGO
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Iluka and IGO is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Iluka Resources Limited and IGO Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGO Limited and Iluka Resources 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 Iluka Resources Limited are associated (or correlated) with IGO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IGO Limited has no effect on the direction of Iluka Resources i.e., Iluka Resources and IGO go up and down completely randomly.
Pair Corralation between Iluka Resources and IGO
Assuming the 90 days horizon Iluka Resources Limited is expected to under-perform the IGO. But the pink sheet apears to be less risky and, when comparing its historical volatility, Iluka Resources Limited is 1.21 times less risky than IGO. The pink sheet trades about -0.06 of its potential returns per unit of risk. The IGO Limited is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 1,858 in IGO Limited on September 3, 2024 and sell it today you would lose (1,178) from holding IGO Limited or give up 63.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 64.92% |
| Values | Daily Returns |
Iluka Resources Limited vs. IGO Limited
Performance |
| Timeline |
| Iluka Resources |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| IGO Limited |
Iluka Resources and IGO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iluka Resources and IGO
The main advantage of trading using opposite Iluka Resources and IGO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iluka Resources position performs unexpectedly, IGO 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 IGO will offset losses from the drop in IGO's long position.| Iluka Resources vs. Iluka Resources Ltd | Iluka Resources vs. China Rare Earth | Iluka Resources vs. Greenland Minerals And | Iluka Resources vs. Mkango Resources |
| IGO vs. Qubec Nickel Corp | IGO vs. Nickel Mines Limited | IGO vs. Mineral Resources Limited | IGO vs. Surge Copper 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |