Correlation Between IGO and Western Copper
Can any of the company-specific risk be diversified away by investing in both IGO and Western Copper 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 Western Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IGO Limited and Western Copper and, you can compare the effects of market volatilities on IGO and Western Copper 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 Western Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGO and Western Copper.
Diversification Opportunities for IGO and Western Copper
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IGO and Western is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding IGO Limited and Western Copper and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Copper 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 Western Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Copper has no effect on the direction of IGO i.e., IGO and Western Copper go up and down completely randomly.
Pair Corralation between IGO and Western Copper
Assuming the 90 days horizon IGO Limited is expected to generate 1.79 times more return on investment than Western Copper. However, IGO is 1.79 times more volatile than Western Copper and. It trades about 0.01 of its potential returns per unit of risk. Western Copper and is currently generating about 0.0 per unit of risk. If you would invest 459.00 in IGO Limited on September 2, 2024 and sell it today you would lose (138.00) from holding IGO Limited or give up 30.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.58% |
| Values | Daily Returns |
IGO Limited vs. Western Copper and
Performance |
| Timeline |
| IGO Limited |
| Western Copper |
IGO and Western Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IGO and Western Copper
The main advantage of trading using opposite IGO and Western Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGO position performs unexpectedly, Western Copper 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 Western Copper will offset losses from the drop in Western Copper's long position.| IGO vs. Grid Metals Corp | IGO vs. First American Silver | IGO vs. Qubec Nickel Corp | IGO vs. Lithium Australia NL |
| Western Copper vs. Fury Gold Mines | Western Copper vs. EMX Royalty Corp | Western Copper vs. Nevada King Gold | Western Copper vs. Aftermath Silver |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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