Correlation Between Commerce Resources and IGO
Can any of the company-specific risk be diversified away by investing in both Commerce Resources 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 Commerce Resources and IGO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commerce Resources Corp and IGO Limited, you can compare the effects of market volatilities on Commerce Resources 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 Commerce Resources with a short position of IGO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commerce Resources and IGO.
Diversification Opportunities for Commerce Resources and IGO
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Commerce and IGO is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Commerce Resources Corp and IGO Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGO Limited and Commerce Resources 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 Commerce Resources 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 Commerce Resources i.e., Commerce Resources and IGO go up and down completely randomly.
Pair Corralation between Commerce Resources and IGO
Assuming the 90 days horizon Commerce Resources Corp is expected to generate 2.67 times more return on investment than IGO. However, Commerce Resources is 2.67 times more volatile than IGO Limited. It trades about 0.03 of its potential returns per unit of risk. IGO Limited is currently generating about -0.11 per unit of risk. If you would invest 5.00 in Commerce Resources Corp on December 28, 2024 and sell it today you would earn a total of 0.00 from holding Commerce Resources Corp or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 95.24% |
Values | Daily Returns |
Commerce Resources Corp vs. IGO Limited
Performance |
Timeline |
Commerce Resources Corp |
IGO Limited |
Commerce Resources and IGO Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Commerce Resources and IGO
The main advantage of trading using opposite Commerce Resources and IGO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commerce Resources 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.Commerce Resources vs. Edison Cobalt Corp | Commerce Resources vs. Champion Bear Resources | Commerce Resources vs. Avarone Metals | Commerce Resources vs. Adriatic Metals PLC |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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