Correlation Between Frontier Lithium and IGO
Can any of the company-specific risk be diversified away by investing in both Frontier Lithium and IGO 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 Frontier Lithium and IGO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Frontier Lithium and IGO Limited, you can compare the effects of market volatilities on Frontier Lithium and IGO 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 Frontier Lithium with a short position of IGO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontier Lithium and IGO.
Diversification Opportunities for Frontier Lithium and IGO
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Frontier and IGO is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Frontier Lithium and IGO Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGO Limited and Frontier Lithium 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 Frontier Lithium are associated (or correlated) with IGO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IGO Limited has no effect on the direction of Frontier Lithium i.e., Frontier Lithium and IGO go up and down completely randomly.
Pair Corralation between Frontier Lithium and IGO
Assuming the 90 days horizon Frontier Lithium is expected to under-perform the IGO. In addition to that, Frontier Lithium is 1.74 times more volatile than IGO Limited. It trades about -0.17 of its total potential returns per unit of risk. IGO Limited is currently generating about -0.18 per unit of volatility. If you would invest 400.00 in IGO Limited on August 29, 2024 and sell it today you would lose (60.00) from holding IGO Limited or give up 15.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Frontier Lithium vs. IGO Limited
Performance |
| Timeline |
| Frontier Lithium |
| IGO Limited |
Frontier Lithium and IGO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Frontier Lithium and IGO
The main advantage of trading using opposite Frontier Lithium and IGO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frontier Lithium position performs unexpectedly, IGO 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 IGO will offset losses from the drop in IGO's long position.| Frontier Lithium vs. Vision Lithium | Frontier Lithium vs. Critical Elements | Frontier Lithium vs. Cypress Development Corp | Frontier Lithium vs. Core Lithium |
| 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |