Correlation Between Lithium Ionic and IGO
Can any of the company-specific risk be diversified away by investing in both Lithium Ionic 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 Lithium Ionic and IGO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lithium Ionic Corp and IGO Limited, you can compare the effects of market volatilities on Lithium Ionic 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 Lithium Ionic with a short position of IGO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithium Ionic and IGO.
Diversification Opportunities for Lithium Ionic and IGO
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lithium and IGO is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Lithium Ionic Corp and IGO Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGO Limited and Lithium Ionic 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 Lithium Ionic Corp 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 Lithium Ionic i.e., Lithium Ionic and IGO go up and down completely randomly.
Pair Corralation between Lithium Ionic and IGO
Assuming the 90 days horizon Lithium Ionic Corp is expected to generate 3.23 times more return on investment than IGO. However, Lithium Ionic is 3.23 times more volatile than IGO Limited. It trades about 0.15 of its potential returns per unit of risk. IGO Limited is currently generating about -0.19 per unit of risk. If you would invest 57.00 in Lithium Ionic Corp on September 1, 2024 and sell it today you would earn a total of 10.00 from holding Lithium Ionic Corp or generate 17.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lithium Ionic Corp vs. IGO Limited
Performance |
| Timeline |
| Lithium Ionic Corp |
| IGO Limited |
Lithium Ionic and IGO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lithium Ionic and IGO
The main advantage of trading using opposite Lithium Ionic and IGO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithium Ionic 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.| Lithium Ionic vs. IGO Limited | Lithium Ionic vs. Grid Metals Corp | Lithium Ionic vs. First American Silver | Lithium Ionic vs. Qubec Nickel Corp |
| 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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