Correlation Between IGO and South32
Can any of the company-specific risk be diversified away by investing in both IGO and South32 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 South32 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IGO Limited and South32 Limited, you can compare the effects of market volatilities on IGO and South32 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 South32. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGO and South32.
Diversification Opportunities for IGO and South32
Poor diversification
The 3 months correlation between IGO and South32 is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding IGO Limited and South32 Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South32 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 South32. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South32 Limited has no effect on the direction of IGO i.e., IGO and South32 go up and down completely randomly.
Pair Corralation between IGO and South32
Assuming the 90 days horizon IGO Limited is expected to under-perform the South32. But the pink sheet apears to be less risky and, when comparing its historical volatility, IGO Limited is 1.31 times less risky than South32. The pink sheet trades about -0.06 of its potential returns per unit of risk. The South32 Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 195.00 in South32 Limited on November 2, 2024 and sell it today you would earn a total of 15.00 from holding South32 Limited or generate 7.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.08% |
| Values | Daily Returns |
IGO Limited vs. South32 Limited
Performance |
| Timeline |
| IGO Limited |
| South32 Limited |
IGO and South32 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IGO and South32
The main advantage of trading using opposite IGO and South32 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGO position performs unexpectedly, South32 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 South32 will offset losses from the drop in South32's long position.| IGO vs. Grid Metals Corp | IGO vs. First American Silver | IGO vs. Qubec Nickel Corp | IGO vs. Lithium Australia NL |
| South32 vs. Hannan Metals | South32 vs. Atco Mining | South32 vs. Leading Edge Materials | South32 vs. Arianne Phosphate |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |