Correlation Between Vital Metals and IGO
Can any of the company-specific risk be diversified away by investing in both Vital Metals 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 Vital Metals and IGO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vital Metals Limited and IGO Limited, you can compare the effects of market volatilities on Vital Metals 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 Vital Metals with a short position of IGO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vital Metals and IGO.
Diversification Opportunities for Vital Metals and IGO
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Vital and IGO is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Vital Metals Limited and IGO Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGO Limited and Vital Metals 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 Vital Metals Limited 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 Vital Metals i.e., Vital Metals and IGO go up and down completely randomly.
Pair Corralation between Vital Metals and IGO
Assuming the 90 days horizon Vital Metals Limited is expected to under-perform the IGO. In addition to that, Vital Metals is 9.94 times more volatile than IGO Limited. It trades about -0.01 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 573.00 in IGO Limited on November 27, 2024 and sell it today you would earn a total of 57.00 from holding IGO Limited or generate 9.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Vital Metals Limited vs. IGO Limited
Performance |
| Timeline |
| Vital Metals Limited |
| IGO Limited |
Vital Metals and IGO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vital Metals and IGO
The main advantage of trading using opposite Vital Metals and IGO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vital Metals 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.| Vital Metals vs. Australian Vanadium Limited | Vital Metals vs. Avarone Metals | Vital Metals vs. Peak Resources Limited | Vital Metals vs. Huntsman Exploration |
| 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 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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