Correlation Between IGO and Altura Mining
Can any of the company-specific risk be diversified away by investing in both IGO and Altura Mining 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 Altura Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IGO Limited and Altura Mining Limited, you can compare the effects of market volatilities on IGO and Altura Mining 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 Altura Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGO and Altura Mining.
Diversification Opportunities for IGO and Altura Mining
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between IGO and Altura is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding IGO Limited and Altura Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altura Mining Limited 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 Altura Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altura Mining Limited has no effect on the direction of IGO i.e., IGO and Altura Mining go up and down completely randomly.
Pair Corralation between IGO and Altura Mining
Assuming the 90 days horizon IGO Limited is expected to under-perform the Altura Mining. But the pink sheet apears to be less risky and, when comparing its historical volatility, IGO Limited is 76.76 times less risky than Altura Mining. The pink sheet trades about -0.18 of its potential returns per unit of risk. The Altura Mining Limited is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2.21 in Altura Mining Limited on August 29, 2024 and sell it today you would lose (1.69) from holding Altura Mining Limited or give up 76.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IGO Limited vs. Altura Mining Limited
Performance |
| Timeline |
| IGO Limited |
| Altura Mining Limited |
IGO and Altura Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IGO and Altura Mining
The main advantage of trading using opposite IGO and Altura Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGO position performs unexpectedly, Altura Mining 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 Altura Mining will offset losses from the drop in Altura Mining's long position.| IGO vs. Grid Metals Corp | IGO vs. First American Silver | IGO vs. Qubec Nickel Corp | IGO vs. Lithium Australia NL |
| Altura Mining vs. Aurelia Metals Limited | Altura Mining vs. Ascendant Resources | Altura Mining vs. Artemis Resources | Altura Mining vs. Azimut Exploration |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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