Correlation Between Prime Mining and IGO
Can any of the company-specific risk be diversified away by investing in both Prime Mining 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 Prime Mining and IGO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prime Mining Corp and IGO Limited, you can compare the effects of market volatilities on Prime Mining 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 Prime Mining with a short position of IGO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prime Mining and IGO.
Diversification Opportunities for Prime Mining and IGO
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Prime and IGO is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Prime Mining Corp and IGO Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGO Limited and Prime Mining 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 Prime Mining 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 Prime Mining i.e., Prime Mining and IGO go up and down completely randomly.
Pair Corralation between Prime Mining and IGO
Assuming the 90 days horizon Prime Mining Corp is expected to under-perform the IGO. In addition to that, Prime Mining is 16.64 times more volatile than IGO Limited. It trades about -0.08 of its total potential returns per unit of risk. IGO Limited is currently generating about -0.22 per unit of volatility. If you would invest 695.00 in IGO Limited on September 3, 2024 and sell it today you would lose (15.00) from holding IGO Limited or give up 2.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Prime Mining Corp vs. IGO Limited
Performance |
| Timeline |
| Prime Mining Corp |
| IGO Limited |
Prime Mining and IGO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prime Mining and IGO
The main advantage of trading using opposite Prime Mining and IGO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prime Mining 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.| Prime Mining vs. Kenorland Minerals | Prime Mining vs. Canstar Resources | Prime Mining vs. Euro Manganese | Prime Mining vs. Chalice Mining Limited |
| IGO vs. Qubec Nickel Corp | IGO vs. Nickel Mines Limited | IGO vs. Mineral Resources Limited | IGO vs. Surge Copper Corp |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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