Correlation Between IGO and Grid Metals
Can any of the company-specific risk be diversified away by investing in both IGO and Grid Metals 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 Grid Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IGO Limited and Grid Metals Corp, you can compare the effects of market volatilities on IGO and Grid Metals 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 Grid Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGO and Grid Metals.
Diversification Opportunities for IGO and Grid Metals
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between IGO and Grid is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding IGO Limited and Grid Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grid Metals Corp 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 Grid Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grid Metals Corp has no effect on the direction of IGO i.e., IGO and Grid Metals go up and down completely randomly.
Pair Corralation between IGO and Grid Metals
Assuming the 90 days horizon IGO Limited is expected to generate 0.22 times more return on investment than Grid Metals. However, IGO Limited is 4.53 times less risky than Grid Metals. It trades about -0.19 of its potential returns per unit of risk. Grid Metals Corp is currently generating about -0.14 per unit of risk. If you would invest 348.00 in IGO Limited on September 1, 2024 and sell it today you would lose (27.00) from holding IGO Limited or give up 7.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
IGO Limited vs. Grid Metals Corp
Performance |
| Timeline |
| IGO Limited |
| Grid Metals Corp |
IGO and Grid Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IGO and Grid Metals
The main advantage of trading using opposite IGO and Grid Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGO position performs unexpectedly, Grid Metals 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 Grid Metals will offset losses from the drop in Grid Metals' long position.| IGO vs. Grid Metals Corp | IGO vs. First American Silver | IGO vs. Qubec Nickel Corp | IGO vs. Lithium Australia NL |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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