Correlation Between IGO and Iluka Resources
Can any of the company-specific risk be diversified away by investing in both IGO and Iluka 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 Iluka 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 Iluka Resources Limited, you can compare the effects of market volatilities on IGO and Iluka 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 Iluka Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGO and Iluka Resources.
Diversification Opportunities for IGO and Iluka Resources
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IGO and Iluka is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding IGO Limited and Iluka Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iluka 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 Iluka Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iluka Resources has no effect on the direction of IGO i.e., IGO and Iluka Resources go up and down completely randomly.
Pair Corralation between IGO and Iluka Resources
Assuming the 90 days horizon IGO Limited is expected to generate 2.65 times more return on investment than Iluka Resources. However, IGO is 2.65 times more volatile than Iluka Resources Limited. It trades about -0.02 of its potential returns per unit of risk. Iluka Resources Limited is currently generating about -0.18 per unit of risk. If you would invest 480.00 in IGO Limited on September 1, 2024 and sell it today you would lose (159.00) from holding IGO Limited or give up 33.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 50.79% |
| Values | Daily Returns |
IGO Limited vs. Iluka Resources Limited
Performance |
| Timeline |
| IGO Limited |
| Iluka Resources |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
IGO and Iluka Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IGO and Iluka Resources
The main advantage of trading using opposite IGO and Iluka Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGO position performs unexpectedly, Iluka 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 Iluka Resources will offset losses from the drop in Iluka Resources' long position.| IGO vs. Grid Metals Corp | IGO vs. First American Silver | IGO vs. Qubec Nickel Corp | IGO vs. Lithium Australia NL |
| Iluka Resources vs. Iluka Resources Ltd | Iluka Resources vs. China Rare Earth | Iluka Resources vs. Greenland Minerals And | Iluka Resources vs. Mkango Resources |
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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