Correlation Between Core Assets and IGO

Can any of the company-specific risk be diversified away by investing in both Core Assets 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 Core Assets and IGO into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Core Assets Corp and IGO Limited, you can compare the effects of market volatilities on Core Assets 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 Core Assets with a short position of IGO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Core Assets and IGO.

Diversification Opportunities for Core Assets and IGO

-0.21

Correlation Coefficient

Core Assets  IGO

Very good diversification

The 3 months correlation between Core and IGO is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Core Assets Corp and IGO Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGO Limited and Core Assets 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 Core Assets 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 Core Assets i.e., Core Assets and IGO go up and down completely randomly.

Pair Corralation between Core Assets and IGO

Assuming the 90 days horizon Core Assets Corp is expected to under-perform the IGO. In addition to that, Core Assets is 3.32 times more volatile than IGO Limited. It trades about -0.09 of its total potential returns per unit of risk. IGO Limited is currently generating about 0.03 per unit of volatility. If you would invest  659.00  in IGO Limited on September 3, 2024 and sell it today you would earn a total of  21.00  from holding IGO Limited or generate 3.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Core Assets Corp  vs.  IGO Limited

Core Assets Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Core Assets Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

IGO Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IGO Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, IGO is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Core Assets and IGO

The main advantage of trading using opposite Core Assets and IGO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Core Assets 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.

The idea behind Core Assets Corp and IGO Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..