Correlation Between IGO and Mineral Res
Can any of the company-specific risk be diversified away by investing in both IGO and Mineral Res 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 Mineral Res into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IGO Limited and Mineral Res, you can compare the effects of market volatilities on IGO and Mineral Res 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 Mineral Res. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGO and Mineral Res.
Diversification Opportunities for IGO and Mineral Res
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IGO and Mineral is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding IGO Limited and Mineral Res in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mineral Res 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 Mineral Res. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mineral Res has no effect on the direction of IGO i.e., IGO and Mineral Res go up and down completely randomly.
Pair Corralation between IGO and Mineral Res
Assuming the 90 days horizon IGO Limited is expected to generate 1.02 times more return on investment than Mineral Res. However, IGO is 1.02 times more volatile than Mineral Res. It trades about -0.06 of its potential returns per unit of risk. Mineral Res is currently generating about -0.06 per unit of risk. If you would invest 670.00 in IGO Limited on November 30, 2024 and sell it today you would lose (394.00) from holding IGO Limited or give up 58.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 69.45% |
| Values | Daily Returns |
IGO Limited vs. Mineral Res
Performance |
| Timeline |
| IGO Limited |
| Mineral Res |
IGO and Mineral Res Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IGO and Mineral Res
The main advantage of trading using opposite IGO and Mineral Res positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGO position performs unexpectedly, Mineral Res 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 Mineral Res will offset losses from the drop in Mineral Res' long position.| IGO vs. Grid Metals Corp | IGO vs. First American Silver | IGO vs. Qubec Nickel Corp | IGO vs. Lithium Australia NL |
| Mineral Res vs. IGO Limited | Mineral Res vs. Grid Metals Corp | Mineral Res vs. First American Silver | Mineral Res vs. Qubec Nickel 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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