Correlation Between IGO and Nickel Mines
Can any of the company-specific risk be diversified away by investing in both IGO and Nickel Mines 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 Nickel Mines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IGO Limited and Nickel Mines Limited, you can compare the effects of market volatilities on IGO and Nickel Mines 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 Nickel Mines. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGO and Nickel Mines.
Diversification Opportunities for IGO and Nickel Mines
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between IGO and Nickel is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding IGO Limited and Nickel Mines Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nickel Mines 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 Nickel Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nickel Mines Limited has no effect on the direction of IGO i.e., IGO and Nickel Mines go up and down completely randomly.
Pair Corralation between IGO and Nickel Mines
Assuming the 90 days horizon IGO is expected to generate 2.14 times less return on investment than Nickel Mines. In addition to that, IGO is 1.67 times more volatile than Nickel Mines Limited. It trades about 0.01 of its total potential returns per unit of risk. Nickel Mines Limited is currently generating about 0.02 per unit of volatility. If you would invest 56.00 in Nickel Mines Limited on August 26, 2024 and sell it today you would earn a total of 3.00 from holding Nickel Mines Limited or generate 5.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 91.62% |
| Values | Daily Returns |
IGO Limited vs. Nickel Mines Limited
Performance |
| Timeline |
| IGO Limited |
| Nickel Mines Limited |
IGO and Nickel Mines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IGO and Nickel Mines
The main advantage of trading using opposite IGO and Nickel Mines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGO position performs unexpectedly, Nickel Mines 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 Nickel Mines will offset losses from the drop in Nickel Mines' long position.| IGO vs. Norra Metals Corp | IGO vs. ZincX Resources Corp | IGO vs. Nuinsco Resources Limited | IGO vs. South Star Battery |
| Nickel Mines vs. Norra Metals Corp | Nickel Mines vs. ZincX Resources Corp | Nickel Mines vs. Nuinsco Resources Limited | Nickel Mines vs. South Star Battery |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |